26 May 2004, The Hindu Business Line

By Alok Ray

ORGANISED by CUTS International, a Jaipur-based civil society organisation, a three-day seminar in Delhi titled “From Cancun to Sao Paulo: The Role of Civil Society in the International Trading System”, was attended by researchers, officials from international institutions (such as WTO, UNCTAD) and governments, representatives of NGOs from many countries in Asia, Africa and Latin America.

The objective was to exchange ideas, develop networking and take an informed stand to further the development goals of the Third World. The immediate outcome was to prepare an Afro-Asian Civil Society Statement that would be presented before the 11th Session of United Nations Conference on Trade and development (UNCTAD XI) to be held at Sao Paulo, Brazil in June 2004.

This seminar was substantially different from standard academic seminars or NGO meets. By bringing together academic researchers, people working at the grassroots from so many countries and policymakers in active and lively debates, the seminar sought to bridge the gap between research, advocacy and capacity-building. It brought out many different perspectives on the same issues.

One thing that came out sharply was that the problem in most African countries is quite different from what it is in India today. Their problems are similar to what India had in the early years following Independence. Their economies still depend on a few agricultural products and, hence, the continuing massive subsidisation of agriculture by the EU and the US hurts them most.

These countries do not have the tax revenue to subsidise their agriculture. The only way they can protect the livelihood of their farmers is by import duties which, in addition to providing protection from subsidised foreign competition, brings them significant revenues to be used for development purposes.

The question of Special and Differential Treatment (SDT) for the LDCs in multilateral trade negotiations came up repeatedly. Several arguments were advanced by different speakers. These included the poor state of infrastructure that imposes an extra cost on LDC producers and the over-dependence on a few commodities for survival of the majority of population in some countries. Some suggested that the developing countries have unilaterally reduced tariffs as part of their structural adjustment programmes. But they are not getting any credit for this ā€” they are being asked to further reduce their tariffs to get reciprocal tariff concessions from the developed countries.

Moreover, the developed countries have derived significant advantages in IPRs, agricultural subsidies and textiles in the intervening period without giving matching benefits to the developing world. For all these reasons, the developing countries can legitimately ask for SDT in multilateral trade negotiations. One commentator, however, pointed out that SDT is a double-edged sword.

It can be used to create divisions within the developing countries bloc by giving preferential treatment to some among them. For example, recently the EU granted tariff preferences to 12 developing countries, including Pakistan, for joining the war on drugs. This STD put countries such as India (especially its textile exports) to disadvantage, for no fault of theirs .

Fortunately, the WTO Appellate Body has ruled against this selective tariff preference by the EU. That, again, underlines the importance of strengthening the multilateral trading system and bringing down the MFN tariffs on a non-discriminatory basis.

This would make regional trading arrangements and SDTs that much less attractive. If some preferential treatment is needed for the “least developed countries’, then this term needs to be very clearly defined, leaving no scope for discretionary interpretation by the interested parties.

In the discussions on the benefits and feasibility of free trade areas in the developing world, several participants from smaller developing countries emphasised the need for giving STD by the big countries such as India and China towards their smaller neighbours. Their point was that such unilateral concessions by big countries would not hurt them much as the smaller countries have a limited number of products to export whereas the big brothers can export a much greater variety. Moreover, such gestures would create the good will and the political momentum in smaller countries to further liberalise.

Once the stronger economies within the developing countries bloc provide STD to their weaker neighbours, that would strengthen the legitimacy of demand by the “least developed countries” for STD from the developed countries as well.

It was generally recognised that globalisation opens up enormous opportunities for the developing countries. But many of them are not able to make effective use of these opportunities. Several speakers emphasised the importance of social and political stability, macro-economic stability, infrastructure, appropriate institutions and governance.

In this connection, the need for capacity building and the special role of NGOs were underlined. Capacity building, it was explained, includes updating knowledge about the rules/laws, improving the working of regulatory agencies, developing institutions to effectively voice the concerns of the people before the appropriate authorities, imparting information about how to fight anti-dumping cases in the developed countries and so on.

The domestic distributive implications of international trade policies were brought out forcefully by several speakers. Even the best of policies create gainers and losers. For example, people gain jobs in the export sector but lose jobs in the import competing sector as a country makes use of international trade opportunities.

The speakers emphasised the need for social safety net, adequate compensation and retraining facilities for those losing jobs as a result of resource reallocation following trade liberalisation. They cautioned that instead of addressing these problems which fall in the domestic policy domain, there is a tendency in the developing countries to pass all the blame onto the developed countries or the working of international institutions.

Many expressed happiness at the way the developing countries formed and maintained an effective coalition while bargaining with the developed countries at Cancun. This could be the biggest achievement for the developing world at the `failed’ Cancun talks.

Now, the challenge is to preserve this coalition and engage in constructive negotiations to carry forward the development agenda in the ongoing Doha Round of talks.

Though a few speakers talked about the need to includ new emerging issues such as restrictions on work-related visas, offshore outsourcing etc, some others voiced reservations about bringing in more contentious issues before the major ongoing concerns like agricultural subsidies, STDs, IPRs etc are satisfactorily resolved.

Opening up talks on new issues (including the so-called Singapore issues) may provide an opportunity to the developed countries to divert attention and stall progress on the outstanding ones. Should the NGOs be called as a negotiating party at multilateral trade talks? There was an agreement that it was not a feasible and or even a desirable option. First of all, whom to call as representatives of NGOs?

Second, if a lot of representatives are called to participate, it would need a stadium to conduct talks. Third, the actual hard bargaining is a professional job to be done by experts. They, in turn, should do their homework, in close touch with researchers and the civil society organisations beforehand. Some speakers also talked about the need to de-dramatise the role of ministerial meetings and to thrash out mutually-acceptable agreements before the ministers meet in the glare of world media and protesting social activists of all persuasions.

Finally, a question came up: How to influence policy-making in the developed countries? Some felt that however much we talk about our needs, that would not cut much ice. US Congressmen would be more concerned with one textile job in North Carolina than a hundred jobs in Bangladesh.

The suggested avenues included networking with NGOs in the developed countries, making use of influential expatriate lobbies (such as the Indian diaspora in the US) and the US trade and business lobbies (people like Mr Bill Gates are big champions of offshore outsourcing in the interest of their companies). Somehow, the American public needs to be convinced that a $1,200 that Mr Kenneth Lee (the former Enron CEO) used to receive each year as cotton subsidy from the US government may not matter to him but it may mean the difference between life and death for some African farmers.