WTO Outcome A Catastrophe for Poor
Press Release
Focus on the Global South
1 August 2004
The outcome of the arm-twisting, opaque and exclusionary process of negotiations
is a framework that protects the interests of the strong.
In agriculture, the framework is a legal instrument for the USand EU to maintain
their subsidies. It is nothing but a box-shuffling exercise, even as developing
countries' markets are forced open.
In industrial tariffs, some room is provided for the Cancun text which was adopted
and which strongly favours developed countries' interests, to be reopened and
negotiated. However, according to Aileen Kwa, policy analyst with Focus on the
Global South, "In order to dilute it in the future, the fight ahead would
be so much harder since the entire annex is a rendition of rules to tear open
developing countries' markets in a manner that will benefit US and EU industries,
but which the African, Caribbean and Pacific countries have already said will
cause deindustrialisation."
In trade facilitation, developing countries gave in to taking on heavy commitments
when resources should be devoted to more pressing and immediate concerns.
Says Kwa: "All in all, the text is a raw deal with the South. It is the
makings of a Round that will be catastrophic for the poor."
Details of arm-twisting, divide and rules strategies as well as the exclusionary
process that marginalized the majority are attached below.
Contact:
Aileen Kwa
Focus on the Global South
Tel: 41 79 3713774
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Arm-Twisting, Divide and Rule Tactics and Exclusion
Corrupted WTO Talks
Aileen Kwa[i][i]
Focus on the Global South
1 August 2004
Arm-twisting, bribes, inducements and threats by the powerful nations, as well
as a totally non-transparent, exclusive process corrupted the outcome of the
WTO trade talks and the ability of developing countries to sustain their positions.
These were some of the instruments used:
ARM-TWISTING AND BRIBES
Withdrawal of Aid
Kenya is one of the most vocal African countries in the WTO championing the
cause of developing nations. Just days before the July WTO meeting, the EU withdrew
aid (on 21 July), to the tune of US$60.2 million. The reason given was the œprevailing
governance situation in Kenya, because of the way the government had handled
a corruption case. Informal sources have speculated that the EU did not want
Kenya to be "too confident" at the meeting.
This is in line with the UK Trade Minister Patricia Hewitt's acknowledgement
that œThe UKis using its influence to persuade developing countries that
a deal is in their interest.[ii][ii]
Taming the Africans With AGOA III
AGOA is a major inducement for some key African countries. African exports to
the USincreased by 55 per cent. Kenya's exports to the US under AGOA, for example,
trebled from $45 million in 2001 to $150 million by 2003. Under AGOA II, African
countries' ability to import fabric and yarn from countries other than the USwas
to expire in September 2004. This was a major worry for the African countries
since most can no longer locally produce their own cotton (due to US subsidies)
and imported yarn from the US is too expensive.
Timed at exactly two weeks before the July WTO meeting, President Bush signed
into law the AGOA III legislation on July 13 extending the provisions of the
Africa Growth and Opportunities Act (AGOA) from 2008 to 2015. The legislation
makes provision for African countries to continue importing "third party"
raw materials for another three years. This was packaged as a major concession
to African countries such as Kenya. Two proponents of the cotton initiative
are also AGOA recipients Benin and Mali. The other countries that are eligible
to export textiles to the US under AGOA include Ghana, Lesotho, Madagascar,
Malawi, Mauritius, Mozambique, Niger, Rwanda, Senegal, South Africa, Tanzania,
Uganda and Zambia.
Millennium Challenge Account
The Millennium Challenge Account “ a development assistance fund “
first mooted by Bush in 2002, kicks into effect in 2004, and has been used as
another carrot. The Account provides $1 billion of aid to 16 developing countries
in 2004. During the week of the WTO talks, faxes were sent by the USto certain
recipient countries, reminding them that they will be given this aid. WTO member
countries who have been selected as recipients include: Benin, Bolivia, Ghana,
Madagascar, Mali, Mongolia, Mozambique, Honduras, Lesotho, Nicaragua, Senegal
and Sri Lanka. Significantly, two of the "cotton" proponents are also
part of this list, Benin and Mali.
Quota Allocations for Sugar
Sugar is a significant export commodity for some countries. On 23 July, a week
before the July meeting, US announced its sugar quota allocation for 40 countries.
This system allows these countries to export a fixed quota to the USat a lower
tariff rate. The largest recipients were the Dominican Republic (185,335 metric
tons) followed by Brazil (152,691 metric tons), Philippines (142,160), Australia
(87,402), Guatemala (50,546), Argentina (45,281).
Visa Waiver
Negotiations on visa waiver to the US was completed only in the first week of
July. The visa waiver was granted to Nigeria.
THREATS
US "Food Aid"
Elimination of export subsidies were supposed to be a big concession by the
EU in at this meeting. However, the EU offer is extremely weak, conditioned
upon US' discipline on food aid. The US in turn resorted to threats in order
not to have its practice of dumping food surpluses changed.
The 16 July text had said that food aid should not be used as a mechanism for
"surplus disposal". The implication is that food aid should be given
in grant form. That is, US PL480 programme where loans are given to countries
in terms of food at a time convenient to the US had to be disciplined. In response
to this, the USTR wrote to all the countries which are recipients of the PL
480 asking them to speak up against the language in the text. The implied message
to them was that with that language, they would cease to get food aid from the
US. This led to LDCs as well as several other countries, such as Mongolia, breaking
ranks with developing countries and taking sides with the US.
Japan's Bilateral Aid
Japan also pressured countries which were beneficiaries of its bilateral aid
programmes. In the first week of July, Japan sent a delegation to Geneva to
meet other member countries. The Japanese told those receiving their aid - mainly
Asian countries- that they were not to go against Japan's offensive interests,
including dropping the three Singapore issues (investment, competition, transparency
in government procurement) from the WTO agenda. Aid recipients were told that
support given for their infrastructural development could otherwise be at stake.
This led to countries taking the softer position “ that the three issues
should be dropped from the Doha Work Programme, but still be retained in the
WTO.[iii][iii]
EXCLUSIVE PROCESS AND A PRESSURE-COOKER ENVIRONMENT
Exclusion and a Take-it-or-leave-it Process
For the first half of the week, the main negotiations “ agriculture “
were held only amongst 5 members, US, EU, Australia, Brazil and India, the so-called
non-group of five (NG5). This left many delegations groping in the dark. But
more importantly, for developing countries, the main decisions were left to
the judgment of Brazil and India. The Agriculture Chairman, New Zealand's Ambassador,
Tim Groser blithely said that he was receiving "political guidance"
from the five "interested parties". As one developing country delegate
exclaimed, "We are all interested parties!" Zambia's Ambassador Love
Mtesa characterized the situation:
"You are kept out of the picture and you only depend on hand-outs from
time to time. Talks like that should be taking place in a public gallery. There
are serious gaps and they need to be properly addressed."
The revised 30 July draft was the work of the Groser, emerging from the informal
and unrecorded discussions in the NG5. The exclusion severely disadvantaged
the majority of developing countries from insisting on their positions
The 30 July draft was then further discussed by a group of 20 countries in a
green room that ran from the evening of Friday the 30th till 8am on Saturday.
The 20 countries emerged endorsing the draft. The amendments they made were
brought back to the various groups “ Africa Group and LDCs, G20 and G33.
However, in that pressure cooker environment, and with countries told that the
more influential developing countries (in the G20) had already accepted the
text, rejection by a small player was extremely difficult.
The agriculture text was thus given the seal of approval, even though the text
was blatantly protecting the subsidies of US and EU.
Intense Pressures Behind Closed Doors: Cotton
Combined with inducements and bribes, the other tactic was pushing developing
country negotiators to the point of exhaustion and subjecting them to pressures
behind closed doors. The Ministers from Benin, Burkina Faso, Mali and Chad,
proponents of the Cotton initiative had been invited to stop in the United States
before their arrival in Geneva. Cooperation with the US was promised in the
areas of biotechnology and other technical assistance programmes.
On Wednesday 28th, Benin, representing the group, called for a press conference
to highlight their expectation that cotton would be dealt with expeditiously.
They said they had shown flexibility by agreeing to move cotton into the agriculture
negotiations, but wanted it to be dealt with on a fast-track. On Thursday night,
the four Ministers were called into consultation with USTR Zoellick. The meeting
lasted till 4am on Friday morning when some "compromise" was reached.
After these talks, the 30 July draft was then issued at 7am. The text was no
different from the old one “which accommodates the US position of giving
$3.7 billion to 25,000 farmers, but did not offer any protection to the 12 million
West African farmers." The only difference was the promise that the WTO
would set up a sub-committee on cotton to review the situation!
In the Heads of Delegation meeting on Friday, Beninspoke in favour of the text!
That evening, another press conference was convened by the cotton proponents.
This time, the Beninspokesperson was no where in sight. Instead, Senegal's new
trade Minister spoke on their behalf, welcoming the new text.
No Time to Study the Text Or Consult With Capitals
The final text emerged at about 8pm on 31st July. A Heads of Delegation meeting
took place at 10pm.Delegates did not have ample time to revert the text back
to capitals, or consult with their experts. The text was adopted at midnight.
Clearly, the process was so rushed that there was no time for negotiators to
fully study the text, and much less allow for constituencies at home to properly
debate it.
DIVIDE AND RULE TACTICS
Breaking the Africa Group Unity
The Africa Group has been subjected to various forms of divide and rule tactics.
One LDC negotiator said that some African member countries had been co-opted,
and were instrumental in breaking the Africa Group unity.
œThe Group has been penetrated. They have worked on certain people in Genevaand
they were used to confuse the Group. So it was difficult to have consensus in
the G90 and the Africa Group. For example, on cotton, some Ambassadors had been
co-opted and told by others not to be disruptive.
There was also careful selection of the composition of countries that would
come together for consultations. Those orchestrating the meetings invited African
countries that had already changed their position from their Cancunstand and
put them with those that were vehemently opposed. Getting the two groups together
in consultations contributed to the breakdown of the Africa Group. It also lowered
the morale of the Group. According to a delegate,
"What they (the powerful countries) are doing to Africa Group is very bad.
They are trying to break them up. They have small group meetings and pick the
African countries which are very strongly against the NAMA text, and put them
in one room with those (other Africans) that are very flexible. This is the
tactic. Of course since they are from the same region, if one saying yes, another
no, it does not help African unity."
Excluding the Outspoken in the Decision-making Process
In the second half of this week, the main negotiations took place in Green Room
meetings of about 20 countries that lasted into the morning. Again, delegates
said that those representing Africa had been carefully selected.
"The representation issue is playing a role. Some of the more vocal countries
have not been invited to the green room. They are trying to make sure that we
don't speak anywhere. The Africa Group for instance was represented by Mauritius
and Morocco on trade facilitation. Those are not countries on our side. That
is why things are not going well. That is their strategy".
[i][i]Many thanks to Fautomata Jawara, and Ziaul Hoque Mukta and Aftab Alam of Actionaid for the information they provided.
[ii][ii] Elliott L 31 July 2004 "Hewitt Urges Poor Nations to Accept WTO's Free Trade Deal", Guardian.
[iii][iii]Informal Communication, Ziaul Hoque Mukta, Actionaid International, 31 July 2004.