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TRADE: Industrial Markets in Dispute

Gustavo Capdevila

GENEVA, Jul 23 2008 (IPS) - The rivalry between rich and poor countries over the international markets for industrial goods has taken root in the World Trade Organisation (WTO), where it represents one of the biggest obstacles to the success of the Doha Round of multilateral trade talks.

“The manufacturing industries in developing countries are getting more and more competitive, and as we all know, the manufacturing industries of the developed countries are getting more and more non-competitive,” India’s Minister of Commerce and Industry Kamal Nath said Wednesday.

But “to sustain the non-competitive industries of the developed countries, we cannot put at jeopardy the manufacturing sectors of developing countries,” he added.

The Doha Round was launched in the capital of Qatar in late 2001 with the aim of further liberalising global trade in farm and industrial products and services, and to reach agreements on other aspects like intellectual property and global trade rules.

The tone of the debates has heated up this week at WTO headquarters in Geneva, where trade ministers from some 30 countries are working to reach a make-or-break agreement on agriculture and NAMA – non-agricultural market access, or industrial goods – that would enable negotiators to wrap up the rest of the Doha Round by year-end.

French Trade Minister Anne-Marie Idrac, who represents the EU because her country currently holds the bloc’s rotating presidency, argued that in a multilateral round of talks, everyone should receive benefits, which she said is what development is all about.

The talks were originally dubbed the Doha Development Round to underscore the importance of compensating developing countries for the imbalances caused by previous rounds of negotiations.

Idrac also said the EU would press to get the “anti-concentration clause” introduced in NAMA.

This mechanism would keep developing countries, when applying flexibilities, from exempting an entire sector or specific portion of tariff lines in the sector.

Felipe Saboya, a researcher with Brazil’s Central Única dos Trabalhadores (CUT), said “the anti-concentration is some kind of tool that developed countries put in the negotiations to prevent developing countries from protecting themselves, precisely those sensitive sectors that would be cut much more on the policy space, in tariffs and so on.”

With the flexibilities, there is a range that may be five percent of the general tariffs that could be protected from any kind of cut. “But the anti-concentration doesn’t allow that,” Saboya told IPS.

So that means the entire production chain is affected, he added. “For instance, if you are talking about the automobile sector, it’s the automobile sector, auto parts, the steel industry, and so on. All the sectors would suffer from that.”

The Brazilian expert said the tariff cuts proposed in the NAMA draft agreement would represent, for countries like Brazil and Argentina, an opening of the markets similar to what occurred in the 1990s, when a wave of liberalisation and privatisation swept through the economies of both nations.

It could even be more serious, he said, because the “the new bound rate will be very very low compared to the past. And they would totally lose any kind of policy space, diminishing any kind of attempt to have a regional industrial policy, a development policy in the region,” said Saboya.

He said the range of coefficient for tariff cuts foreseen in the NAMA draft text would mean 10 percent job losses in Brazil’s industrial sector, and the loss of 1.2 million jobs in Brazil’s car industry alone.

Rudi Dicks, of the Congress of South African Trade Unions (COSATU), told IPS that his country would suffer similar losses. “Because of our commitments in the Uruguay Round (which went into effect in 1995), about 60,000 jobs have been lost in South Africa, including textiles.”

“Already because of the same commitments with the Uruguay Round, our electronics industry doesn’t exist any longer. We import directly from Malaysia and China television sets and electronic components. This is the experience that we have of the devastation of tariffs cuts,” he added.

“We are very angry with the fact that the NAMA text still does not reflect some of the key principles of the Doha Declaration. Firstly, that this is a development round. Where is the development aspect? Where is the issue in relation to jobs, where is the issue in relation to reducing poverty?” commented Dicks.

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