By Aileen Kwa
GENEVA, Aug 6 2013 (IPS)

The current discourse on Global Value Chains by key proponents and also the World Trade Organisation (WTO) secretariat is that developing countries should liberalise – in goods and services – and conclude a trade facilitation agreement.

Some have also suggested that any restrictions on exports should be eliminated (e.g. export taxes on raw materials). According to this discourse, these strategies would help developing countries more deeply integrate into global value chains as they can import more cheaply and thus export more competitively.

The picture on closer examination, however, is not so simple.

Global value chains are not a new concept. They have been a part of trade since colonisation when developing countries were the providers of the raw materials, sent to the developed countries for use in a variety of ways, including in their production of higher-end goods.

It is true that today, these value chains are expanding, simply because of the expansion of transnational corporations across the globe. Lead firms, mostly based in developed countries, and some developing countries, use suppliers from all over the world to carry out their various functions.

Developing countries, however, are differentially placed along global value chains. Some have a share in higher value added sections of the value chains, but most do not.

Not all players can equally gain from their participation in the value chains. It all depends on where a country is lined up in terms of technological capacities, the depth of their manufacturing capacities, how developed their services sectors are, the size of their enterprises, their managerial expertise and their ability to meet the standards of the international markets – to name only a few criteria.

Due to these and other limitations, developing countries could open up, and they could become more integrated, but the quality of their integration may not be of real benefit.

As Rashmi Banga notes in her paper “Measuring Value in Global Value Chains”, countries may be linked to the chains, but they may not be “gainfully” linked to them.

In today’s value chains the value is captured in the design and conceptual stage where having the technology is important, as well as in the final sales and marketing end. However, this is not where most developing countries are located.

Developing countries are generally located in the lower value manufacturing section of the value chain; and even then, this is true for some, not all, developing countries.

Mere liberalisation will not upgrade countries’ technological or services supply-side capacities. Nor will a trade facilitation agreement – expediting the entry of imports through a range of customs procedures (some of which are very costly and administratively intensive) – be a magic bullet in catapulting developing countries into competitiveness on the global scale.

In sum: there are no shortcuts.

In any case, the central question for developing countries is not about entering value chains at any cost. The real question for developing countries is how they can deepen their production capacities, so that they can garner a bigger share of the value added.

To do so, the path of industrial development, agriculture and services development must be undertaken. We need structural transformation in industry if we want our manufacturing capacities to move beyond being assembly lines, increased production capacities in a range of services sectors, and a more vibrant agricultural sector, especially in countries with large rural populations.

The agricultural sector cannot be overlooked or bypassed if a large section of the population is engaged here and depends on agriculture for employment. Just like jobs in manufacturing, people must be provided with fair prices and wages. This is critical to create domestic purchasing power, and to fuel domestic demand and thus the demand for the growth of local industries.

Failure to engage in structural transformation and deepening of production capacities could mean that countries get caught in supplying raw materials and being sites for low value added manufacturing tasks.

Very often, the domestic or regional markets offer better opportunities than global value chains for developing countries in terms of obtaining a larger share of the value added.

Trade policies must be used strategically to support industrial development of key sectors, and should be approached dynamically, changing over time as some industries mature and new ones develop. In that context, across-the-board liberalisation will not help.

In conclusion, the global value chains, as noted by South Africa’s ambassador to the WTO Faisal Ismail, do not provide a framework for helping developing countries develop beyond their current comparative advantages. UNCTADs latest analysis of the value added trade data also shows that more exports do not mean more value-added exports.

The global value chains discourse comes from the place of wanting to further ease the operations, movement and access of transnational corporations across global markets, with real dangers for developing countries’ firms and industries.

The priority for developing countries is building their production capacities. To this end, the flexible and dynamic use of trade policy instruments (tariffs, government regulations) that support industrialisation, agricultural and services development, complemented by fairer trade rules, are necessary.

Excerpt:

By Aileen Kwa and - -
GENEVA, Mar 16 2009 (IPS)

Given the way the Economic Partnership Agreement (EPA) negotiations have been based on the requirement for reciprocal market opening with the European Union (EU), they are likely to bring more losses than gains for Africa and make the path to development even more difficult than it already is. For this reason, the South Centre recommends an alternative approach.

While the price African countries would have to pay to maintain preferential access into the EU is very high, the value of this access will essentially vanish in 5-10 years. This is because the EU is already negotiating Free Trade Agreements (FTAs) with Central America, Andean countries, ASEAN, India, and other entities. For preferences that will last but a few years, African countries are being asked to sign away control over their trade policy.

In any case, the Least Developed Countries (LDCs), which make up 34 out of the 47 African countries negotiating the EPAs, can avail themselves of the Everything But Arms (EBA) preferential scheme of the EU. For non-LDCs, options more supportive of development should be fully explored, including the search for regional and other markets (rather than looking mainly to the EU for export markets), the Generalised System of Preferences (GSP+), as well as renegotiating Article 24 of the World Trade Organisation (WTO) on regional and free trade agreements.

Consequently, for countries that want to sign an EPA, we propose the use of development benchmarks pegged to their trade liberalisation schedules. This will ensure that only when countries attain a certain level of development will they have to undertake far-reaching reform of their trade regimes vis-a-vis a very strong economic partner, the EU.

The liberalisation schedules we propose become operative 10 years after the entry into force of an EPA. If at that time, countries have attained 20 percent of the economic size of the EU (measured by per capita Gross National Income and per capita value of manufactured exports), and if their exports show a certain level of diversification, they would eliminate tariffs on 20 percent of their tariff lines. If after 15 years, the EPA has facilitated their development and they attain 50 percent the economic size of the EU (in per capita terms), and if the countries fulfil other criteria demonstrating that their economies are diversified, and if they attain a certain level of trade integration with other African countries, then the countries will eliminate tariffs on 50 percent of their tariff lines in trade with the EU. After 20 years, if they have attained 70 percent the size of the EU, and fulfilled the diversification and regional integration criteria, they would eliminate tariffs on 70 percent of their tariff lines over five years.

Currently South Africa has attained 27.2 percent of the economic size of the EU, Mauritius 23 percent, Nigeria 6.3 percent, and Cote d’Ivoire 5 percent.

We propose that this conditioned liberalisation schedule be accompanied by a ‘bare bones’ goods-only EPA. Whilst the EU is pushing hard for countries to liberalise not only goods but also services, intellectual property, investment, competition, and government procurement, these categories are more appropriately addressed when African economies have grown and can negotiate from a position of strength rather than weakness.

In addition to the benchmarking mentioned above, the ‘bare bones’ EPA should have the following elements:

-Removal of the most favoured nation treatment (MFN) clause. This clause makes it mandatory that African countries offer to the EU what they offer to another major economy after the entry into force of the EPA. This works against regional integration and the promotion of south-south trade.

-Removal of the standstill clause. All of the interim EPA agreements have a standstill clause barring the application of new customs duties or the raising of existing ones, even for sensitive products, after the entry into force of the Agreement.

-Removal of the provision to freeze export taxes and duties. The EU wants access to Africa’s raw materials in order to maintain its competitiveness. Yet putting in place these export taxes and duties is important to encourage diversification and value addition for African economies.

In addition, EPAs should include far better safeguards than the interim versions now contain: for instance, a more ‘proactive’ infant industry clause.

The current infant industry clause is ‘reactive’, limited to situations in which an injury has happened or seems imminent. A more proactive clause will allow a government to put in place additional duties on those goods imported into its area which compete with its own infant industries. An infant industry can be defined as an industry which has been established for not more than 15 years. This clause should not expire since countries will always have infant industries.

In conclusion, South Centre urges African countries to exercise the greatest caution when approaching these negotiations. It is of vital importance for developing and least developed countries that they not foreclose the options for industrialisation for future generations. (END/COPYRIGHT IPS)

(*) Aileen Kwa is coordinator of the Trade and Development Programme at the South Centre, Geneva.

Excerpt:

By Aileen Kwa
GENEVA, Oct 27 2008 (IPS)

The Economic Partnership Agreements (EPAs) being negotiated between the European Union and African countries are likely to exacerbate the food import surges from Europe.

Unlike the World Trade Organisation (WTO) negotiations, where countries are talking about reducing tariff rates from bound tariff levels, in the EPAs negotiations, tariffs for EU products entering Africa will mostly be brought down to zero, writes Aileen Kwa, coordinator of the Trade for Development Programme, South Centre, Geneva.

Mismanaging the agricultural sector can impact very negatively on countries’ development and can also increase levels of poverty.

The latter has in fact been the result of the last twenty years of structural adjustment policies in many African countries. From being net food exporters in the 1970s, the liberalisation policies of the 1980s and 1990s led to only small increases in the growth of exports, but exponential growth in terms of Africa’s imports of food products.

Whilst 72 percent of the population in Sub-Saharan Africa, or 286 million were living under two dollars a day in 1981, the figure is 72.2 percent in 2007, or 551 million.

Lower tariffs essentially led to a deluge of food imports ­subsidised tomato paste from Italy destroying Ghana and Senegal tomato producers; subsidised Dutch poultry making it financially unviable for small chicken farmers in Ghana and Senegal; European Union supported dairy products particularly milk powder displacing small producers throughout many African countries including Tanzania and Kenya; EU exports of subsidised wheat and other cereals to Africa.

Conversely, mismanaging the agricultural sector can impact very negatively on countries’ development and can also increase levels of poverty.

Not only are the imports increasing unemployment, the poor developing countries’ food import bills are also escalating. The deficit in 2001 of 11 billion dollars is predicted to rise to 50 billion dollars by 2030. If food prices remain high, this figure could easily be doubled.

The Economic Partnership Agreements (EPAs) being negotiated between the European Union and African countries are likely to exacerbate the food import surges from Europe. Unlike the World Trade Organisation (WTO) negotiations, where countries are talking about reducing tariff rates from bound tariff levels, in the EPAs negotiations, tariffs for EU products entering Africa will mostly be brought down to zero.

Tariffs are a very important trade and development policy tool for Africa. This is particularly so as Europe continues to subsidise its agricultural production so that opening up of borders leads to a situation of unequal competition and in fact, an invitation for Europe to dump agricultural products in Africa.

Agricultural safeguards have been included in the various interim EPAs which several African countries have initialed at the end of 2007. Unfortunately, only a few countries -and in a few cases- have the conditions to use those safeguards, while it is the opposite for the European countries.

As the EU continues to heavily subsidise the agricultural sector, the playing field is not level between the EU and African countries. This is because subsidies are a form of ‘natural’ safeguards that the EU uses. By providing these supports, the EU is lowering prices domestically, and this has the same effect as raising tariff levels.

According to agricultural expert Jacques Berthelot, reducing domestic agricultural prices by 50 percent has the same impact as an increased duty of 40-50 percent.

EU provides agricultural subsidies to the tune of between 50 to over 70 billion a year. Studies have already shown that by their sheer volume, these supports do distort trade. The World Bank has also noted that the decoupling of farm payments ­which is what the last Common Agricultural Policy reforms did- is only effective if these payments are one-time buyout programmes to compensate farmers for the transition. If there are no time limits, decoupled payments will have the same detrimental and distorting effects as other subsidy programmes.

These subsidies provide the EU with a natural buffer or ‘safeguard’. However, EU subsidies are not being dealt with, either in the context of the EPAs, or in the WTO. At the same time, the EU tells African countries that the subsidies issue will not be negotiated in the EPA since it is already being handled at the WTO.

A couple of points need to be made with regards to tariffs and safeguards. Firstly, safeguards are a safety net. African countries should in the first place ensure that their tariff levels allow producers to have access to the domestic market, so that the conditions are conducive for agricultural production to be increased. That is, the domestic markets are not deluged by imports.

Secondly, we have not thought through fully the implications of safeguards on countries’ common external tariff. Will regional blocks be required to invoke the safeguard? If not, and if only a country within a regional block invokes the safeguards, will these be effective for the country needing protection? How will regions manage their common external tariffs?

Again, we go back to the necessity to have high enough common external tariffs (CETs) particularly in the area of agriculture, so that African countries do not have to repeatedly contravene the CET that we have set for our regions, and so that our agricultural production capacities can increase even in the face of asymmetrical agricultural trade in favour of the EU.

In as far as the EPAs constrain our ability to put a stop to unwanted and subsidized import surges, by forcing tariffs down or by only affording a weak safeguard, they will remain a major challenge for the development of African countries. (END/COPYRIGHT IPS)

Excerpt:

By Aileen Kwa
GENEVA, Aug 6 2008 (IPS)

At the heart of the collapse of the World Trade Organisation’s Doha Round last week are the different opinions on liberalisation and its relation to development. Developed countries promote the idea that liberalisation will bring about development and thus that the failure of the Round constitutes a blow for the poor.

Immediately after the collapse of talks, ministers from the U.S., European Union (EU) and Australia made statements about the huge loss that the crash of the Doha Round would signify for the poor.

Said U.S. Trade Representative Susan Schwab, ‘‘it’s ironic that while there’s a global food crisis, these talks came down to how much and how fast countries should have a right to raise their tariffs’’.

Will the poor suffer because of the way the Doha talks ended? The failure of the talks can in fact be regarded as a victory because key developing countries were able to stand by their principles and to defend the interests of the poor in their countries. This included, for example, insisting on effective safeguards for small farmers.

The fight over the special safeguard mechanism (allowing countries to increase tariffs to prevent flooding of agricultural markets) illustrated a more nuanced approach taken by most developing countries.

India, Indonesia, China and African countries were saying that markets and trade need to be carefully regulated. A flexible approach to trade policy is critical in order to respond to the development challenges of the day.

A replay of the Uruguay Round of multilateral trade negotiations (1986 " 1994) was avoided. In the Uruguay Round, it was only after signing on the dotted line that developing countries started to question the fundamental imbalances central to those agreements.

If the Doha package of agreements had been submitted to, these imbalances would have been locked in and deepened, not eliminated or even reduced.

The world is in a very different place than when the World Trade Organisation (WTO) was formed in 1995. At that point the Washington Consensus advocating liberalisation and deregulation was still at an all-time high. It has fallen from its pedestal since.

Its failure can be seen in the fact that many African countries, despite implementing neoliberal structural adjustment policies to the letter, have de-industrialised in the last 20 years. The failure of the Doha talks is another blow to the crumbling consensus.

The WTO, with liberalisation at its core, is at a crossroads. It can attempt to amble on, paying no heed to the experiential realities of the majority of its members. Or it can take this opportunity to acknowledge that the dynamic journey of development requires a system that allows for diversity, flexibility and change.

Binding a country’s trade policy and liberalising in accordance with a standard formula cannot accommodate this dynamism. In fact, liberalisation cannot be an end in itself. Countries should liberalise only when it is of benefit to them.

What requires regulation at the multilateral level is countries’ responsibility for the effects of their actions on people outside their borders. This is where there is a huge gap in terms of global governance. Elections are nationally based. However, countries’ actions can destroy other countries’ industries, create unemployment and poverty.

Some call this ‘‘regulation of countries’ extra-territorial responsibility’’ or, in plain words, doing no harm to others. An example of this would be a system that disallows countries to export directly or indirectly subsidised agricultural products. The current WTO fails miserably in this regard.

Countries should be allowed to explore a diversity of trade policies, in as far as they are not harmful to others outside.

The current WTO has also not been faithful to its own mandate, which says that parties to the agreement recognize that ‘‘their relations in the field of trade and economic endeavour should be conducted with a view to raising standards of living, ensuring full employment and a large and steadily growing volume of real income and effective demand’’.

Rather than the liberalisation of trade, the WTO should have as its bottom-line the attainment of these benchmarks.

To crown it all, Africa is being challenged by climate change, high oil and food prices, and increasing water stress. Our adaptation and mitigation strategies will have far-reaching implications on how we produce food and how we organise our industries and economies.

It will also have an effect on how and how much we trade internationally. We should be setting our sights on having low carbon economies and adjusting our production and trade accordingly.

A new world is already asserting itself. We are moving rapidly away from a unipolar or bipolar world towards multiple centres of economic and political powers, again with implications for our production and trade.

Can the WTO respond effectively and, if not, might it then fade into the shadows?

Analyst Aileen Kwa is the coordinator of the trade for development programme at the intergovernmental South Centre

Excerpt:

By Aileen Kwa
GENEVA, Aug 4 2008 (IPS)

Safeguards to protect small farmers’ livelihoods in African and other developing states, as opposed to subsidies for commercial agricultural interests in rich countries, remained an insurmountable obstacle in the World Trade Organisation (WTO) talks, leading the Doha Round to collapse last week.

The Doha Round crumpled unceremoniously on Tuesday July 29, the ninth day of the mini-ministerial meeting. The straw that broke the camel’s back – the special safeguard mechanism (SSM) – has to do with small farmers’ livelihoods in the developing world.

However, it should be noted that there were gaping differences on a whole host of other issues that were yet to be discussed in detail, such as the U.S.’s subsidies for its cotton farmers, as well as several issues in the industrial tariffs negotiations.

The difference in views on the SSM was not only between the U.S., on the one hand, and India and China, on the other. In fact, a hundred developing countries did not accept the figures which WTO Director General Pascal Lamy had produced on Friday July 25 (the fifth day of the negotiations).

These countries – the Group of 33 (which includes 46 countries); the African, Caribbean and Pacific (ACP) group; the Africa Group; and small and vulnerable economies (SVEs) – produced an alternative set of numbers on Sunday July 27.

The wrangle between the U.S. and India and China was highlighted simply because the negotiations were taking place mainly among seven players: the U.S., the European Union (EU), Japan, Australia, India, Brazil and China (also known as the Group of Seven or G7).

The other selected ministers who had been invited to Geneva were excluded from those negotiations and were waiting in the corridors. Hence, it appeared that India and China were alone in disagreeing with the U.S..

The SSM is meant to address import surges in farm products. In order to protect its domestic agricultural sector from injury, the SSM would allow a country to implement an additional tariff to stem the import surge.

Among several problematic constraints in the Lamy figures that the hundred developing countries identified was the suggested trigger of 140 percent. This means a country should have a 40 percent increase in imports compared to a preceding three-year period before the SSM can be invoked.

Developing countries, in contrast, were asking for a five or, at most, 10 percent import increase. A 40 percent import increase before action can be taken is likely to be too late as the import surge could already have wiped out the country’s producers. However, the U.S. and a few other countries with agricultural exporting interests were immovable on this issue.

On the last two days of the talks, other possible options were proposed in the G7 which India accepted but the U.S. not. The U.S. wanted a weak SSM to ensure that the Doha Round would provide them access to developing countries’ agricultural markets.

The battle was thus between commercial interests in agricultural exporting countries, and the livelihoods of subsistence farmers in Africa, Asia and elsewhere.

What happened in the area of the SSM, however, was echoed in several other areas. Commercial interests were seen as more pressing than the measures developing countries wanted in order to minimise the threats of unemployment and de-industrialisation.

If talks had not collapsed over the SSM, there was a real chance they would have done so in the area of the non-agricultural market access (NAMA) negotiations, or the area of cotton, where consensus was not even on the horizon.

There was also the issue of preference erosion, which was not yet resolved. If markets all around were to be liberalised further, many African countries stood to lose, rather than gain, because of the carving away of existing trade preferences.

In sum, when African countries asked for their development concerns to be taken on board, their requests were frustrated at every turn. Conversely, the package on the table would have given the U.S. and EU special treatment.

The U.S. and EU would have been able to retain all of their agricultural subsidies, only shifting them to different subsidy categories. They would also have cut industrial tariffs by a smaller percentage – about 30 percent – while developing countries were expected to cut tariffs by about 58 percent.

Analyst Aileen Kwa is the coordinator of the trade for development programme at the inter-governmental South Centre.

Excerpt:

By Aileen Kwa
GENEVA, Jun 24 2008 (IPS)

Delegates at the World Trade Organisation (WTO) disagree with WTO Director General Pascal Lamy’s view that the negotiations on trade in agricultural products are ‘‘nearly there’’.

Earlier this month Lamy noted that, ‘‘we are nearly there in agriculture, but not really there in market access for industrial goods’’. He has made similar pronouncements in other forums.

Some developing country delegates have vehemently disagreed with such an assessment.

One African delegate told IPS on condition of anonymity that, ‘‘there is this idea which has been floated that agriculture is progressing. It is more stable, and we should focus on NAMA (non-agricultural market access). We regard this with great concern. Agriculture has made progress in the past months. But are we there yet or are we close? No’’.

He elaborated, saying that delegates are concerned about the U.S.’s domestic supports. The recent Farm Bill is, even in this era of extremely high prices, set to increase supports to U.S. farmers.

Another developing country delegate also noted that, ‘‘there is a wrong picture drawn out there that there is a lot of progress within the consultations in agriculture. We are underestimating how much work we still have in agriculture. We are very far from agreement on the SSM (special safeguard mechanism)’’. The SSM is meant to be a tool for developing countries to protect their markets.

He said that the special session on the SSM held by the chairperson of the agriculture talks, Crawford Falconer, dubbed ‘‘a walk in the woods", at the end of last week produced no results.

Part of the problem is that the U.S. has still not indicated that it would accept the lower domestic support range in Falconer’s latest negotiating text. The U.S. currently provides about 7.5 billion dollars in ‘‘trade-distorting’’ domestic supports.

The agriculture draft text allows the U.S. to continue such supports to the tune of between 13 to 16 billion dollars, the exact figure to be negotiated. Even the lower end of the range will allow the U.S. room to double its subsidies to farmers.

Press reports at the end of last week quoted India’s minister of commerce and industry Kamal Nath saying, ‘‘my offer to the US is that they should reduce their subsidy by just one dollar and we have a deal. (But) they say, ‘forget about reducing the subsidy even by a single dollar, we want to have a right to double it in the next 10 years’".

Talks on tropical products and preferences are equally stuck. The European Union (EU) seemingly aims to liberalise products that the African, Caribbean and Pacific (ACP) countries want protected in order to preserve their access to the EU market.

While sugar and bananas are the headline products at risk, other products that are important to the ACP include a whole variety of fresh and dried fruits; various forms of oils (ground nut and cocoa); and vanilla and other extracts, essences or concentrates.

The latter products are often disregarded because of their small trade volumes. However, what may not be seen by bigger economies as significant exports from the ACP are important to ACP small-scale farmers.

The NAMA talks have reached a stalemate. There are several major issues there that are potential deal breakers.

Firstly, those developing countries that are to apply deep tariff formula cuts are opposed to the numbers in the current text calling on them to reduce their tariffs by a larger percentage than even the developed countries. These countries form the NAMA 11 coalition of developing countries which include South Africa, Namibia, Egypt, Tunisia, Brazil, Argentina and India.

According to an analysis by the inter-governmental organisation South Centre, the NAMA 11 developing countries will have to reduce their tariffs by between 54 and 60 percent while the developed countries reduce their tariffs by only 30 percent.

Trade unions from NAMA 11 countries sent a letter to their trade ministers earlier this month stating that the numbers in the draft text would lead to ‘‘the loss of employment in many sectors, and will hamper the future development of industries in our countries’’.

The NAMA text allows countries some ‘‘flexibilities’’, referring to a limited number of tariff lines that can have smaller cuts than what is called for by the general formula.

However, a major problem for Mercosur (the South American Common Market comprising Argentina, Brazil, Paraguay and Uruguay) is that the text has introduced trade volume restrictions for items enjoying such ‘‘flexible’’ treatment. This was pushed for by the U.S. and EU.

For the Mercosur countries, it means that even though ‘‘flexibilities’’ are provided they will not be able to utilise them fully. Explained one negotiator, ‘‘take an economy like Argentina. Though they may be allowed flexibilities for 12 to 14 per cent of their tariff lines, they will hit the trade volume limitation after using flexibilities on only seven percent of their tariff lines’’.

As a group, Mercosur has proposed that they apply flexible treatment to 16 percent of their custom union’s tariff lines without any trade volume restrictions. One delegate of Mercosur warned that this ‘‘is a make or break issue for us. Without it, we cannot even sit down and talk’’.

The other issue that NAMA 11 countries have loudly protested against is the clause on ‘‘anti-concentration’’. The chairperson of the NAMA talks, Donald Stephenson, has included negotiating texts which developing country delegates say will considerably reduce their ability to protect certain sensitive sectors.

These texts, they told IPS, go beyond the mandate of the NAMA negotiations. The original mandate states that countries should not use their flexibilities to protect entire categories of products. The text now says that entire sub-categories of products cannot be protected by the flexibilities.

As one delegate explained, ‘‘why should we comply? Shall we have the same thing in sensitive products?’’ He was referring to the clause in agriculture where the EU and other developed countries enjoy flexibilities and are able to protect certain agricultural sectors.

‘‘Should we say there that they cannot have their flexibilities concentrated on a whole group of products? Will they agree? It is against the mandate.’’

*This is the second of two articles by trade policy expert writer Aileen Kwa.

Excerpt:

By Aileen Kwa
GENEVA, Jun 23 2008 (IPS)

As closed-door meetings proceed between selected countries, other member states of the World Trade Organisation (WTO) have resorted to following media reports in an attempt to stay abreast with the current Doha Round of negotiations on agriculture and industrial goods.

Delegates told IPS that the talks have become non-transparent. A number of limited-attendance, high-level meetings involving senior officials and ambassadors are taking place while the majority of members are excluded. Many are feeling more and more frustrated about being locked out.

The mini-ministerial meeting that the WTO Secretariat had optimistically punted for earlier this month has been put on hold.

As a delegate from one of the African-Caribbean-Pacific (ACP) group of countries told IPS on condition of anonymity, ‘‘the meetings are all restricted. It is the masters of the universe who are part of them. We are not there.

‘‘Thank goodness for freedom of the press,’’ he said, alluding to the daily news reports of ‘‘Inside U.S. Trade’’ and the ‘‘Washington Trade Daily’’. These have become some delegates’ sources of information on the various by-invitation-only negotiating meetings.

The chairpersons of the talks at the top of the agenda – agriculture and industrial goods or non-agricultural market access (NAMA) – released new negotiating texts on May 19. However, even with these revised texts, too many issues remained unresolved.

The major states, including Brazil, then advised WTO Director General Pascal Lamy to hold off on the mini-ministerial meeting until more convergence between positions emerges.

Negotiations during the past year took place in chairperson-led technical meetings of over 30 delegations – the so-called Room D, E or F discussions, depending on the room that was used at the WTO headquarters in Geneva. The process has now changed.

Senior officials from the capitals of the major negotiating parties from both developed and developing countries have been in town for the past two to three weeks. A number of small group consultations at senior official or ambassadorial level have begun.

The closed-door meetings taking place have included Lamy’s ‘‘Green Room’’ meetings of about 30 delegations every Wednesday and Friday morning. These are mainly attended by ambassadors and only one delegate per country is invited. The Lamy Green Room meetings apparently cover the issue of progress in both the agriculture and NAMA talks. ‘‘Green Room’’ refers to limited access.

Whilst not terming it as such, these meetings are in effect the ‘‘horizontal’’ process that Lamy had advocated for some time. This refers to negotiations to take place simultaneously on agriculture and NAMA in order for trade-offs to emerge between the two.

Running parallel are the Group of 12 (G12) meetings on NAMA which are taking place regularly at the U.S. mission. Only about 12 or 13 delegations have been invited to these meetings and they are attended by senior officials from capitals. These meetings are focused on the contentious issues within the NAMA negotiations.

Then there is what is known colloquially in the WTO corridors as ‘‘the Don process’’ where the chairperson of the NAMA negotiations, Donald Stephenson, is conducting his own consultations on countries with levels of bound or committed tariffs at the WTO; and on trade preferences and small and vulnerable economies (SVEs).

Regarding agriculture the chairperson, New Zealand Ambassador Crawford Falconer, has convened what he terms the ‘‘walk in the woods’’ consultations on the issues of special products (SPs), the special safeguard mechanism (SSM) and the Green Box.

Again, only about 13 delegations are invited to these SPs and SSM discussions – usually at senior official or ambassadorial level. These include the U.S., Australia, Brazil, Canada, Argentina, Uruguay and Malaysia on the exporting side and Indonesia, India, China, Turkey, Korea and Kenya that are arguing for the protection of their domestic agricultural sectors.

On the very difficult issues of preference erosion (where the ACP countries want the EU to maintain its tariffs so that they can continue benefiting from preferential access to the EU market) and tropical products (where a group of Latin American countries want the EU to liberalise its tariffs on tropical products), the meetings are not organised by Falconer.

The EU has been meeting separately with these two groups of countries. The latter have not met, despite having directly opposing agendas.

There is very little information flow between the groups engaged in the various consultations. Even less information is flowing to the majority of members thatare left out of these processes. Debriefings have been held on the G12 meetings at the U.S. mission but, according to one source, no real information was provided.

Murmurings are emanating from the excluded majority that it is ‘‘about time’’ they spoke out against these opaque processes.

Meanwhile, two different opinions have emerged on the trajectory of these negotiations. As the days tick by, more members are increasingly doubtful that a Doha deal is possible before the summer break at the end of July.

As one key developing country delegate said in confidentiality to IPS, ‘‘I was much more optimistic a few months ago. In the meetings currently going on, things don’t happen’’. He observed that ‘‘the U.S. seems to be gearing itself up to blame others (if the talks collapse)’’. He characterised the EU as seemingly ‘‘distracted. They don’t seem mobilised’’.

Other delegates speculated that the U.S. might be engineering the collapse of the Doha Round on NAMA to avoid being blamed for its refusal to move on domestic supports.

If July passes without a deal, the possibility of a successful conclusion to the round after the summer may be slim. As a delegate mused, ‘‘it is difficult to imagine that we will have the presence of a minister of the current U.S. administration at a ministerial meeting in September’’.

However, others in Geneva are more cautious. A developing country delegate cautioned that if WTO members allow the Doha Round to be directed by a few members, the prospects for a mini-ministerial meeting before the end of July are ‘‘very high’’.

‘‘We are in a very uncertain and dangerous situation because this is where the process can be hijacked by Pascal Lamy. We can find ourselves in a mini-ministerial without any concrete substance, especially if the chairpersons of the talks revise their texts based on what they think and these texts go straight to the ministerial.’’

* This is the first of two articles by trade policy expert writer Aileen Kwa.

Excerpt:

By Aileen Kwa
GENEVA, Jun 18 2008 (IPS)

Southern governments have stressed the need for developing countries to use the food crisis as an opportunity to rethink development strategies and to put in place policies that support agricultural development.

The new push came at a high-level dialogue on food and energy security that was organised jointly Tuesday by the government of Indonesia and the South Centre, an intergovernmental body of Southern governments.

"We want to be able to understand the real causes of the food crisis," executive director of the South Centre Yash Tandon said. "There are multiple causes, but some are more fundamental and structural than others, and we need to identify these."

He went on to note that with every crisis, there is an opportunity. "In the 1980s and 1990s, we had a similar food crisis. We had food riots in Eastern and Western Africa. We used to call them IMF (International Monetary Fund) food riots. But we lost the opportunity to address the causes of the food crisis at the structural level. We handed the solutions to the very structures that in my view caused those crises. We have to understand this crisis properly and take this challenge in our own hands."

These ideas were supported by the acting deputy secretary-general of the United Nations Conference on Trade and Development (UNCTAD), Lakshmi Puri.

"We have been talking about this as a wake-up call," said Puri. "This is a wake-up call in the area of development and development strategies. The South has to wake up to certain realities and mistakes it has made…It is a wake-up call for regional action. And it is time for a rethink of global strategies. The whole theology of food self-sufficiency and food security being served through imports or not, versus local production – this whole thing needs to be revisited."

Puri said that many have laid the blame for tight food supplies and hence higher prices on India and China's increased food consumption.

"Many times, it is said that India and China's demand is going up and that is why we have a crisis. Demand going up is a success of development and is a positive thing to be welcomed. What has failed is the supply side for a number of reasons.

"The agricultural supply capacity of many developing countries has been suffering from distorted incentives and insufficient support from both domestic and international policy makers. This development failure lies at the heart of the crisis, and we must urgently reverse this trend if we are to avoid a repeat of the crisis."

Oxfam International's representative Teresa Cavero noted that the underlying cause of the price crisis "did not fall from heaven, but was due to decades of wrong policies. Developing countries have been forced to let agriculture fall apart. Through structural adjustment policies, countries have dismantled the role of the state and its capacity to intervene. In many countries the private sector did not occupy the space left by the state."

Food and Agriculture Organisation (FAO) representative Josef Schmidhuber said that due to the overlap between the food and biofuels markets, "food prices will remain high as long as energy prices are high. Higher food production is not an antidote to higher food prices in the long run. Even if we try to address the problem (of high prices) through higher production, we will not succeed because the energy market will siphon off the production."

Nevertheless, he noted that the current situation is "the best opportunity to have a renaissance of global agriculture."

Schmidhuber also said that "whilst the majority of our countries are net sufferers, the hardest hit are countries that are net importers of both food and fuel. Many Least Developed Countries (LDCs) fall into this rubric." The 49 Least Developed Countries, according to United Nations classification, are those with a per capita income of less than 750 dollars per annum.

But the Geneva dialogue revealed that there is no consensus on solutions to the food crisis amongst governments, international institutions and civil society.

Cuban representative Juan Antonio Fernández registered his deep disappointment with the outcome of the FAO High Level Conference on World Food Security in Rome earlier this month.

"The outcome in Rome was not the best. The short-term solutions offered by the most powerful will not resolve the hunger of people." Fernández later told IPS that "you cannot find any human rights perspective in the declaration. This had been proposed by Cuba. Just the recognition of the right to food as a fundamental human right was rejected. The target was so low. We made a reservation on the Declaration, together with Argentina, Nicaragua, Bolivia, Ecuador and Venezuela."

Oxfam's Cavero said "we disagree that concluding the Doha Round is a solution to the food crisis. Trade rules are long-term and are largely irreversible. Any agreement is likely to undermine rather than strengthen developing countries' food system."

Yash Tandon noted the different strategies of participants. "Broadly speaking, two views came out of the dialogue. One view started with the rise in global prices as offering an opportunity for investments in agriculture, including, for example, the suggestion of a Green Revolution for Africa. The Green Revolution, however, has had a controversial history, and in the past has placed food production in the hands of corporations and suppliers of hybrid seeds and fertilizers, etc.

"The other view started with the idea of prices that must be guaranteed to the small peasants who constitute the bulk of the population in many developing countries. The two views lead to different strategies." He said that he preferred the small-farmer rather than the corporate-oriented strategy as the response to the present food crisis.

Excerpt:

By Aileen Kwa
GENEVA, Jun 2 2008 (IPS)

West African states are working at salvaging regional relations with a renewed attempt to collectively negotiate an economic partnership agreement (EPA) with the European Union.

Talks have taken place at regional level since Ghana and Cote d’Ivoire each initialled their own EPA with the European Union (EU), putting the two countries at odds with their neighbours who had all declined to initial an agreement.

IPS has been able to confirm that the member states of the Economic Commission for Wes African States (ECOWAS) have agreed that the body would coordinate the region’s negotiations with the EU from now on until June 2009, the target date for conclusion. This will be done with the assistance of the West African Economic and Monetary Union (WEAMU).

This decision flows from a meeting held between Nigeria, Cote d’Ivoire and Ghana and the ECOWAS Secretariat in early January this year.

These three states are the only ones in the region without least developed countries (LDCs) status. This explains why Cote d’Ivoire and Ghana felt pressured to sign EPAs last year, since their exports to the EU market would otherwise have met with higher tariffs. LDCs are able to continue their exports to the EU at zero tariffs under the EU’s Everything But Arms trade preference policy.

IPS received conflicting reports that Nigeria threatened its neighbours to achieve this decision.

Speaking to IPS, Ndiogou Fall of a West African farmers’ organisation known as ROPPA, said, ‘‘Cote d’Ivoire was told by Nigeria that they would have to pay higher taxes on products they export to Nigeria if they did not align themselves with the ECOWAS in the EPA negotiations. As a result Cote d’Ivoire retreated from its stand.’’

Fall said that Ghana, too, was told that it could face higher tariffs from the big Nigerian market.

Nigeria accounts for 61 percent of the region’s real gross domestic product and therefore is an important market for the other countries in that region.

However, this was denied by a West African government official, who declined to be named due to his involvement in the process. ‘‘At no stage did that kind of thing happen. The January meeting was not hostile.’’

Arianne Idzenga of Oxfam International added that, ‘‘what was even a stronger signal from Nigeria to Cote d’Ivoire and Ghana was its announcement to suspend the talks for a common external tariff for the region.

‘‘Since the ministerial meeting in early 2008, when the region aligned their positions anew, ECOWAS’s negotiations on a common external tariff have resumed and Nigeria is participating’’.

Now, according to the West African official, ‘‘in West Africa, we are not divided. Cote d’Ivoire and Ghana did what they needed to do to avoid economic collapse. If there is a contradiction, it is because these countries have initialled. But we are now determined to work together towards a comprehensive EPA.’’

He conceded that there may still be problems ahead. ‘‘For now, nobody is really concerned (about the fact that these countries have initialled). Those (interim) texts have been frozen, pending the ECOWAS process. The concern will arise when the European Commission says, ‘Ghana, please sign and ratify the interim EPA’. That is when we will have a problem.’’

The countries are well aware that their regional designs can collapse at that point. The reason is that the common external tariff regime which western African states decided in 2001 to conclude is impossible if Ghana and Cote d’Ivoire go through with their bilateral agreements with the EU.

To make matters even more problematic, indications are that Cote d’Ivoire has continued its bilateral negotiations on its own despite the renewed regional effort. Ken Ukaoha, president of the National Association of Nigerian Traders (NANTS), told IPS that ‘‘rumours have it that Cote d’Ivoire is doing some negotiations bilaterally’’.

This was confirmed by an inside source who declined to be named. He described the present situation as ‘‘quite chaotic. It is strange since these countries should converge on a regional text. There is no information-sharing mechanism in the region. If this continues, there is a strong likelihood that they would end up diverging’’, the source told IPS.

According to a joint research paper by the Overseas Development Institute (ODI) and the European Centre for Development Policy Management (ECDPM), published in March 2008, the individual EPA signed by Cote d’Ivoire requires liberalisation from 2009 onwards.

Between 2009 and 2012, 60 percent of Cote d’Ivoire’s imports from the EU are supposed to be liberalised. Ghana’s liberalisation timetable also starts in 2009, with 70 percent of imports to be liberalised within the first 10 years.

If implemented, the different EPA market access schedules will throw ECOWAS’s attempt at establishing a common external tariff into disarray. After all, the two bilateral EPAs were based on Ghana and Cote d’Ivoire’s individual tariff schedules.

The West African official told IPS that, ‘‘the basis for market access for the EC should be ECOWAS’s common external tariff and not individual country schedules. Otherwise we will end up with multiple access conditions for the EU.

‘‘Some of our members do not have established industrial sectors, for example. Working from their individual schedules, it may be possible for them to grant zero tariffs for industrial goods from the EU. But what happens to other members that have an interest in protecting their industries?’’

Meanwhile, the EU has organised a seminar in Bamako, Mali, which started on May 29. The Europeans have characterised it as an ‘‘information seminar’’ to update state and non-state actors on the way forward with the EPA talks in West Africa.

This seminar, according to the EU, follows from the ‘‘difficult period’’ in the final months of last year when most of the region declined to sign an interim EPA.

Will the Bamako meeting smooth out the bumpy road towards regional integration or lead to further divisive results? Idzenga spoke to IPS from Bamako on May 29, saying, ‘‘this information seminar is a good example of the pressure the EC is putting on actors in the region in terms of imposing their (the EC’s) calendar and issues.

‘‘In the programme, there is an entire slot on investment when investment has been something the region has said it does not want to negotiate in an EPA. How does investment get onto a programme on the regional state of play? I am outraged.’’

*This is the first in a series of two articles. Aileen Kwa is a specialist writer on trade policy who is attached to the non-governmental organisation Focus on the Global South.

Excerpt:

By Aileen Kwa
GENEVA, Jun 2 2008 (IPS)

Nigeria took a strong stance on determining its own economic development recently when it rejected an economic partnership agreement (EPA) with the European Union. The country has also adopted a different approach towards its neighbours regarding protection for its nascent industries.

The West African Economic and Monetary Union (WAEMU), consisting of eight francophone members, put in place a common external tariff in 2000. The eight members are: Benin, Cote d’Ivoire, Mali, Senegal, Burkina Faso, Guinea Bissau, Niger and Togo.

In 2001, the heads of states of the Economic Community of West African States (ECOWAS) took the decision to harmonise their import tariffs with those of WAEMU. The countries that belong to ECOWAS but not WAEMU include Nigeria, Ghana, Liberia, Cape Verde, Sierra Leone, Gambia and Guinea.

The WAEMU common external tariff has four tariff categories: zero percent for essential social goods; five percent on essential or basic raw materials, capital goods and specific inputs; 10 percent for intermediary products; and 20 percent for final consumer goods.

According to a memorandum by Ken Ukaoha, president of the National Association of Nigerian Traders (NANTS), Nigeria had announced its intention in 2004 to comply with the harmonised common external tariff but demanded the creation of a fifth tariff band of 50 percent in addition to the existing WAEMU common external tariff.

‘‘It was upon the realisation of the fact that the WAEMU tariff rate is not protective of a young and aspiring economy like Nigeria’s with its prospects and plans for industrialisation, coupled with loud cries of Nigerian stakeholders, (that) the Nigerian government officially applied for the creation of a fifth band’’, wrote Ukaoha.

According to Ukaoha, Nigeria’s request ‘‘appears to have gradually snowballed into controversies as some countries in West Africa have continued to reject this appeal’’. As a result, even though January 1, 2008 was the formal date for the harmonisation, the region remains without a common external tariff.

Ukaoha also argues that the fifth band of tariffs at 50 percent is not just in Nigeria’s interest but will benefit ‘‘all industrially aspiring countries of West Africa’’.

He wrote, ‘‘why must we continue to import everything we need without the plan for possible self-reliance? Shall we remain forever under the illusion of donating raw materials to already developed countries whilst we import finished goods (made) from the same raw materials we sent out? A level of protection is necessary to ensure diversification of our resources in our region’’.

Ndiogou Fall, from a West African farmers’ organisation known as ROPPA which is based in Senegal, told IPS, ‘‘Nigeria understood the importance of the regional market (during the EPA talks) and that the EU was trying to access the West African markets through the EPAs.

In contrast, Cheikh Dieye of the Senegalese non-governmental organisation known as ENDA (Environmental Development Action in the Third World) told IPS that in initialling the interim EPA, Cote d’Ivoire ‘‘was just thinking about the EU market. They forgot about the local and regional markets’’.

‘‘Nigeria is one of the largest markets in the region. It wanted to protect its own market, as well as to keep its access to neighbouring markets. It has a very powerful position in West Africa. Five neighbouring countries depend on the Nigerian market,’’ said Fall.

Nigeria was able to reject an EPA last year because oil supplies 98 percent of its foreign exchange and 95 percent of its revenues. As one West African official explained on condition of anonymity, ‘‘whether Nigeria signed an EPA or not, the EU could not penalise them on their exports of crude oil’’.

However, oil aside, its productive industries are not doing well. Ukaoha pointed out in a paper on the implications of EPAs for agro-based industrialisation in Nigeria that these industries in Nigeria ‘‘are on a general downward trend’’. This is of concern since 70 percent of the workforce is engaged in the agricultural sector.

When IPS spoke to Ukaoha about adding a fifth band to the tariffs, he said that it was discussed at the ECOWAS ministerial meeting in February this year. The ministers mandated ECOWAS to ‘‘go back to look at the viability and the modality’’ of a fifth band. The study is to be completed by this month.

Apart from looking at whether or not to introduce a higher band of tariffs, ECOWAS also needs to decide which tariff level the band would be pegged at, if it is decided to go ahead with this plan.

The WAEMU’s common external tariff is at a lower level than other similar regimes in Africa. The East African Community’s common external tariff goes up to 25 percent. The central African common external tariff has bands up to 30 percent, which seems to be the highest tariff band in the African region.

In addition to these tariff bands, sub-regions have also agreed on a small ‘‘exceptions’’ list where some sensitive products enjoy higher tariffs. However, these tend to be limited. In the case of the East African Community, for example, only 58 tariff lines (less than half a percent of all tariff lines) have tariffs higher than 25 percent. Tariffs for such lines range from 35 to 100 percent.

However, despite these attempts to integrate regionally, Godfrey Kenyenze noted in his book called ‘‘Free Trade and Regional Integration in Southern Africa’’ that ‘‘open regionalism’’ benefits African countries less because African economies are less developed and primary production dominates. ‘‘In this situation, tariff reduction or elimination does not lead to increased regional trade, integration or the efficient utilization of the region’s resources’’.

Most countries in Africa, including the WAEMU, are following an ‘‘open regionalism’’ approach where a region’s states collectively come together to open up their borders to each other.

*This is the second in a series of two articles. Aileen Kwa is a specialist writer on trade policy who is attached to the non-governmental organisation Focus on the Global South.

Excerpt:

By Aileen Kwa
GENEVA, May 30 2008 (IPS)

Metals and mineral mining have been notorious for the "resource curse" they have inflicted on the communities who live where they are mined. Today, as prices are high, the appetites of these mining companies are on the increase.

There are new investments in oil in Angola and Uganda, and in metals in Madagascar and Ghana. These come from both China and the traditional corporations in the "new scramble for Africa".

More and more, companies' interests are protected by investment and trade agreements, allowing companies the ability to sue states if government action or legislation is seen as impinging upon their profits.

"Even more than agriculture, for metals, it has always been big business," Thomas Lines, whose forthcoming book 'Making Poverty: A History' will be published in July, told IPS. "Mines are a big thing. You need a lot of capital behind you. So it tends to be done by big corporations.

"The mining industry is well known for its 'enclave' projects. The mining company is given the right to exploit the mine. It puts in the infrastructure, gets the stuff out, and negotiates with the government on the terms of payment. What all too easily happens is that the mining company makes a lot of money out of it and a very few in government get paid off. Locally, it provides some employment, but it is often quite vulnerable employment in pretty harsh conditions."

Lines shows in his forthcoming book that mining has been a significant creator of poverty. By the late 1990s, least developed countries (LDCs) specialising in mineral exports showed the highest levels of poverty – up to 82 percent of their people were living on less than a dollar a day.

"There is also the issue of land being taken up, not just by the mine itself, but by the transport infrastructure, roads and railways," Lines said. "Now, a lot more mines are open cast or open pit. Rather than drilling down below, they just have the whole top of the hill removed. This is far more environmentally damaging.

"And there can be other environmental consequences such as pollution. It depends on the nature of the commodity. When gold is being removed from ore, they can use cyanide, and if they are not careful, it could get washed into the rivers, causing contamination."

Citing an example of the 'enclave' nature of the industry, Lines said "bauxite for aluminium has been the main export industry of Guinea. But there are few benefits for the people. It is an enclave industry. It takes place in a corner of the country. Bauxite is shipped out. The money comes in and doesn't get shared."

Clearly, a lot more government regulation is needed, yet the ability to regulate has been progressively stripped away from governments.

Researcher Salimah Valiani has been tracking Canadian mining activities in Canada and in the developing world. She shared her views with IPS.

"In the era of structural adjustment and the free market starting from the 1980s, governments were told that they had to open up mining to private interests. Social controls around mines were stripped away.

"In Papua New Guinea, a few cents from every dollar of nickel used to go to the community livelihood fund. Governments were advised to remove these things as a way to 'attract' investments."

New tools to protect corporate interests are constantly being evolved. These tools are becoming increasingly sophisticated. Nathalie Bernasconi, an attorney at the Washington-based Centre for International Environmental Law (CIEL) drew attention to the 2,500 bilateral investment treaties (BITS) that governments around the world have signed to protect the interests of companies.

"These treaties are based on principles such as non-discrimination (companies from any country must be treated similarly) and national treatment (foreign companies must be given the same treatment as local companies)," Bernasconi told IPS. "But there are also other rules, which can be very problematic, such as on expropriation. A domestic regulation that limits the profitability of an enterprise can sometimes be seen as amounting to expropriation, so that the government has to pay compensation."

She noted that it is not just the substantive rules that are tilted in the interest of the companies, but that agreements also give investors procedural rights: investment treaties often allow investors to sue host governments directly under international arbitration, but not vice-versa. There are now many such investor-State cases, a new development which Bernasconi said started to pick up with the North American Free Trade Agreement (NAFTA).

In South Africa, she said, the government enacted two legislative acts in 2004 to stimulate economic growth and address a major obstacle to realising the country's full economic potential – inequality. That is one of the legacies of decades of apartheid, and governments have pursued laws to include all South Africans in economic growth.

Two laws, the Black Economic Empowerment Act and the Mineral and Petroleum Resources Development Act, are now being challenged by Italian investors before an international investment tribunal.

Italian investors control about 80 percent of South Africa's natural stone exports, she said. "Now the mining companies from Italy are attacking the South African Black Economic Empowerment Act, a legislation for affirmative action. The mining companies say it violates the investment treaty between South Africa and Italy. The investors want to be compensated because South Africa is trying to redress the problems from apartheid."

Bernasconi said that CIEL has also been involved with the San Mateo community in Peru. "We brought the Peruvian government to the Inter-American Commission on Human Rights (IACHR). You have a Canadian gold mining company that had polluted the ground water, air and land, and had not dealt with the waste related to gold mining. There were enormous health implications for the villages located near the mining project, especially for children. We worked with the local communities there and won that case. The Commission requested that Peru ensure that the Canadian company clean up and remove the toxic waste."

But the kinds of actions the government has to take to protect human rights could potentially be attacked under investment treaties, she said. "And then the government has a conflict between adhering to its human rights obligations to protect the population, and protecting the gold mining company and its profits. If there is a BIT, the company could actually challenge the government.

"Investors may not always win, but they can bring these cases, and a government has to put a lot of resources into defending the legislation. It could also have a chilling effect on a government's ability to put in place good legislation. The government can be told, 'If you adopt this legislation, we are going to sue you'."

Another tool used to protect corporation interests is "host government agreements" (agreements between a government and a company) that are usually not made public, Bernasconi said. A recent study by the International Finance Corporation (IFC) and the UN Special Representative to the Secretary General for Business and Human Rights (SRSG), John Ruggie, shed light on such agreements in various sectors.

"Many of these agreements contain so-called 'stablisation clauses'," Bernasconi said. "The laws of the state are 'frozen' or 'stabilised' so that if the government changes the law, the company won't be subjected to it, or will have to be compensated for any losses occurred. Parliament can adopt a new legislation and an investor is immune for 20 years! The worst stablisation clauses are in the extractive industries sector. There is one where the freezing clause is 100 years!"

"We need to come up with a production model which is sustainable, both socially and ecologically," says Valiani. "A lot of mineral development is not sustainable. Given all the social and environmental consequences, we need to question our reliance on these extractive resources."

Excerpt:

By Aileen Kwa
GENEVA, May 21 2008 (IPS)

As the 61st annual World Health Assembly gathers in Geneva this week, a major issue that the world’s governments are struggling with is patents on medicines, and whether the option to digress from a strict patent system should be endorsed by the United Nations World Health Organisation (WHO).

The United States is the sole country obstructing the ability of the WHO to push for a more flexible intellectual property system, according to several sources. This issue is being negotiated at the WHO’s Intergovernmental Working Group on Public Health, Innovation and Intellectual Property (IGWG).

According to the WHO’s website, “developing countries remain largely excluded from the benefits of modern science.” IGWG’s mandate is “to prepare a global strategy and plan of action on essential health research to address conditions affecting developing countries disproportionately.”

IGWG was to have already agreed on its plan of action. However, the controversial issue of intellectual property has prevented consensus, and negotiations remain ongoing. At issue for the U.S. is the further dilution of its desired strict intellectual property system and the interests of its pharmaceutical industry.

“We have some sort of consensus that the WHO should step in and work in the area of intellectual property (in terms of helping countries push for a more flexible intellectual property system),” Thailand’s lead negotiator, Dr. Shripen Tantives, said at a panel on Access to Medicines organised by Oxfam Tuesday.

“We think this is a key moment that many countries either developed and developing agree that WHO should do something to improve health in the area of IP (intellectual property). We have these principles in the draft (plan of action). Unfortunately, (complete) consensus is pending because of only one member. Only one member disagrees with the new role of the WHO.”

Tantives, who said she was speaking in her personal capacity, noted that since the IGWG process began in 2006, “member states had to make compromises which resulted in some diluted text which will have consequences for the provisions and implementation in the future.”

Noting her dissatisfaction with the current text, Tantives said, “(With) what we have now in the IGWG (plan of action) we are not satisfied because if we go into the details, we have to compromise, to delete some very substantive elements.”

Ellen ‘t Hoen of Médecins Sans Frontières (Doctors Without Borders) who spoke at the same panel, said “companies today charge high prices because they have patents. There are two consequences of this patent system. One, R&D (research and development) is directed only where there is a market. Two, access (to drugs) is horribly expensive.”

Patents provide companies a monopoly over their knowledge. “If we finance research and development independently from access, we may be getting somewhere.”

She described the current system as the “blockbuster model”, where pharmaceutical companies build their operations around a few blockbuster drugs or drugs that command very high sales. The result is neglect of the diseases that developing countries’ populations suffer from.

“We don’t get out of bed if we can’t make 1.5 billion dollars per product (per annum). The blockbuster model is not necessarily the way to go.”

‘T Hoen also said that the Trade Related Aspects of Intellectual Property Rights (TRIPS) and the Public Health Declaration of 2001, where the World Trade Organisation (WTO) declared that TRIPS should not compromise governments’ public health objectives, “put access firmly on the political agenda.”

Since then, she said, the prices of first generation anti-retrovirals for HIV have come down dramatically. Countries have started issuing compulsory licences (for production of generic versions of patented drugs), as in Thailand and Brazil.

However, “progress is confined (largely) to AIDS-related treatments. What about other diseases and products? Success is on a case-by-case, drug-by-drug basis, and is highly dependent on civil society actions.”

In the last two years, she said, Thailand issued compulsory licences for anti-retovirals, and for drugs to fight cancer and heart disease, and the country came under considerable political and economic pressure from the United States.

Speaking at the same panel, Nicoletta Dentico from the Drugs for Neglected Diseases Initiative (DNDi), a non-profit drug development organisation, noted that despite some success stories, the general situation remains bleak. “The 10/90 gap still remains.” The 10/90 gap refers to the developed countries accounting for 90 percent of global pharmaceutical sales, whilst accounting for only 10 percent of the 14 million plus global deaths occurring annually due to infectious diseases. Developing countries represent 90 percent of the 14 million deaths but only 10 percent of pharmaceutical sales.

Said Dentico, “When you have nothing except death as the alternative, you may want to use common sense if a drug should be registered (patented) or not. It is important to talk about patents, but look at least at the transition phase at what is lacking in terms of needs.”

Can the WHO be a major player in correcting the crisis of the current system? Speaking to IPS on the sidelines of the panel, Oxfam America’s Rohit Malpani said that “the WHO is an effective counterweight. It provides advice to developing countries to use safeguards, and it can use its voice to prevent governments from signing up to higher levels of IP. It can assist developing countries by providing studies on the public health consequences of data exclusivity, for example. However, there is resistance from the U.S.”

Malpani added, “WTO has already guaranteed countries the ability to override patents in certain circumstances. WHO should be able to provide the advice and technical support. All countries should be able to attain this support. We should not even have this discussion to begin with.”

Excerpt:

By Aileen Kwa
GENEVA, May 19 2008 (IPS)

As WTO negotiations pick up this week, some developing countries are in growing doubt that a deal liberalising their economies further could help them cope with the food crisis.

IPS spoke to an ambassador from an ACP (African, Caribbean and Pacific) country who declined to be named. His country is a net food importer and is now struggling to deal with the high food prices on the world market.

“WTO should not prevent us from having the policy space that we want to protect our agricultural sectors. We cannot totally rely on an import market to feed our population. An agreement that does this (constrains our policy space) will not fly at this time. We cannot be constrained unduly in what we can do in agriculture.”

Even more than the negotiations in agriculture, he was concerned about the loss of tariff revenues through the negotiations on cutting duties on industrial products. “The proposals (in the non-agricultural market access negotiations) will cut our applied (actual tariff) rates, and we will have our customs revenue cut. In the context of governments having to find more money to buy oil and to buy food, don’t cut our income at such a sensitive time! These things cannot be politically saleable. Our politicians will say, ‘How can I sign off when I face increasing energy and food bills?'”

In addition to revenue cuts, his country is also bracing against income cuts from the loss of markets such as the EU.

Simulations of the Doha Round conducted by the World Bank (Anderson and Martin in 2005) and even the EU’s own sustainability impact assessment (by Kirkpatrick et al of the University of Manchester in 2006) have shown that ACP countries will lose out in the Doha Round because of the erosion of preferences. In a liberalised environment, countries which have historically been provided preferential access will lose some of these markets.

According to the ACP ambassador, “income losses are particularly true for preference-receiving countries that will suffer from preference erosion. We are talking about existing export earnings that are going to be eroded by this Round. We need to be given more breathing space.”

Indonesia’s ambassador to the WTO, Gusmardi Bustami, has said that his country would fight even harder to have flexibilities or less liberalisation in the agriculture negotiations. Indonesia has been leading the G33, a developing country coalition of 46 countries arguing for less or no liberalisation in certain strategic agricultural products.

Bustami told IPS he was skeptical about the push from certain quarters that more liberalisation – so that food supplies could circulate unhindered around the world – would alleviate the food crisis.

“We have to fill the shortage of supply by increasing national production capacity. Some people say that you increase supplies by opening your market and reducing your tariff barriers. Maybe this is not the solution for all countries. What we need is more production. Let countries produce the food themselves, so that they are not very much dependent on others.”

The ambassador from the ACP country also talked about the different approaches to trade between agricultural exporting developing countries and the majority which have much less capacity to export.

“There are many perspectives around the world. The ultimate strength of the multilateral trading system will depend on how it deals with the different realities. It cannot be a one-size-fits-all approach. To prescribe the same remedies at the same time (as in the WTO) is something that cannot be legitimate. This is an issue I am grappling with right now, and it will be a recurring theme. It will not go away.

“There is solidarity amongst developing countries but there are also important differences. We are not all the same, we have different resources, and our economies have developed in different ways. And if multilateralism is to have credibility, it has to develop its rules to recognise these differences.

Excerpt:

By Aileen Kwa
GENEVA, May 17 2008 (IPS)

The fate of the world’s oldest customs union, the Southern African Customs Union (SACU), is hanging in the balance as a result of the economic partnership agreements that most SACU countries have signed with the European Union (EU).

SACU governments are now trying to figure out how to prevent paralysis or even total collapse. But they are finding themselves divided. Some in the SACU want a retreat from the liberalisation agreements they have agreed to while others want to move ahead and deepen the integration with the EU, for fear of losing out on EU aid and market access.

Five countries make up SACU: South Africa, the largest economy in the customs union, and Botswana, Lesotho, Namibia and Swaziland (the so-called BLNS countries). SACU has been a customs union since 1910.

There have been tensions within SACU since 1999, when South Africa concluded Trade, Development and Cooperation Agreement (TDCA) with the European Union. The agreement will affect the BLNS countries negatively.

Since is determines that nearly all EU goods will eventually enter the SACU without duties, there will be considerable loss of tariff revenue for the BLNS: up to 50 percent for Lesotho and Namibia, 30 percent for Swaziland and 10 percent for the relatively more ‘‘developed’’ Botswana.

Dot Keet, a trade specialist speaking on behalf of the Africa Trade Network at a non-governmental organtions’ meeting on the EU’s free trade agreements in Brussels last month, also pointed out the negative effect of the TDCA on South Africa itself. IPS managed to get a copy of her address which explains, in part, South Africa’s present reluctance to sign the economic partnership agreement (EPAs) with the EU.

When the TDCA was signed, South Africa’s exports to the EU increased initially but, once the country started implementing lower tariff levels, EU exports also expanded. According to Keet, ‘‘trade deficits between South Africa and the EU are growing at about two billion euros per annum in the EU’s favour’’.

Keet said that EU agricultural exports into South Africa and SACU have increased by 50 percent since 2003. The entry of processed food imports has been most damaging: jams and tinned fruit and vegetables.

‘‘Parmalat (an Italian food company) came to South Africa and bought up the dairy companies in Western Cape. It terminated supply contracts with local dairy companies to give them milk. And these local companies closed down because Parmalat was importing powdered milk from the EU. This has had a dramatic impact on employment in the sector,’’ Keet explained.

In contrast, the EU is maintaining import tariffs and quotas on ‘‘sensitive products’’ to protect EU producers. Many of these, such as beef, are products in which South Africa and the other SACU countries have a competitive advantage.

Keet added that most of the new penetration from the EU into South Africa is in the financial services sector and other capital-intensive areas, such as high technology electronics. ‘‘This is reflected in the slow pace of employment creation in South Africa,’’ of great concern since unemployment rates hover around 40 percent (including those unemployed who have given up job seeking).

Interesting policy shifts are in the air, though. Keet revealed that, ‘‘the South African government is undertaking some changes in its domestic strategies. Amongst these are efforts to implement a more proactive industrialisation strategy with a more diversified trade strategy, especially in relation to other major economies of the South: China, India and Brazil and the rest of Africa.

‘‘Key players in the South African government are now concerned about some of the terms of the TDCA. They are in somewhat of a quandary as to how to deal with those commitments,’’ Keet said.

She went on to disclose that ‘‘South Africa is trying to get a revision of this with the Europeans. They are now arguing that in order to accommodate the interests of the BLNS, the TDCA needs to be revised for policy coherence within SACU and SADC (the Southern African Development Community).

‘‘The EU has responded that they will not renegotiate the TDCA and the only way the terms can be changed is in the context of a full EPA. This will mean the inclusion of new issues (services, investment, competition and procurement) as well as the MFN (Most Favoured Nation) clause, and this is very serious,’’ Keet cautioned.

The MFN clause will oblige South Africa to offer the EU the same market access terms it might offer to other countries, such as India and Brazil, in future bilateral agreements. The TDCA is a goods and agriculture-only agreement and, unlike the EPA, does not include these ‘‘new issues’’ nor the MFN clause.

From various reports, within the SACU, governments are now deeply divided about how to proceed in the EPA talks with Europe. Three of the BLNS countries, Swaziland, Botswana and Lesotho, are urging their neighbours to quicken the pace of negotiations with the EU. These countries intend to conclude full EPAs by the end of 2008.

From one inside source in SACU, who asked to be anonymous due to the sensitivity of the issues, the main motivating factor seems to be the fear of losing out on EU aid. If there are renegotiations of the interim EPAs (as some other ACP countries are urging), they want these to be done in the context of negotiations on full EPAs. This is also the position of the European Commission.

Namibia, on the other hand, would like the interim EPA renegotiated before it is ratified by the end of the year. South Africa supports such a strategy. According to SACU’s Executive Secretary Tswelopele Moremi, both these countries submitted a list of their concerns to the SACU trade ministers earlier this year regarding the EPAs.

Since there are differences between the liberalisation timetable of the TDCA and the EPA, the differentiated tariff structures will pose a major challenge for SACU in maintaining its common customs union.

Yet this is only the top layer of the complexities that loom ahead. Other regional integration issues that SACU is still working on could be completely torn to shreds if full EPAs are signed by some within SACU.

Internally, SACU has yet to harmonise its industrial and other economic policies. According to one South African governmental source who spoke on condition of anonymity, ‘‘the SACU harmonisation of industrial policies, rules of origin, customs procedures and any other area it might wish to harmonise in the future… all of these would be thrown into disarray and have the potential to worsen the (already challenging) situation.’’

*Expert writer Aileen Kwa is attached to the non-governmental organisation Focus on the Global South. This is the first article in a series of two.

Excerpt:

By Aileen Kwa
GENEVA, May 12 2008 (IPS)

The high food prices that have sparked riots in many parts of the developing world – from Indonesia, India and Bangladesh to Cameroon, Cote d'Ivoire and Haiti – should come as no surprise. These are only the latest in a series of events many developing countries have suffered as a result of opening their borders and neglecting domestic agriculture.

Food market in Londrina, Brazil. Credit: Gerson Sobreira

The consequence has been the certain erosion of their capacity to produce their own food.

In the era of stronger state control in the 1970s and even the early 1980s, domestic food markets in the developing world were often in the hands of state marketing boards and cooperatives. Marketing boards would guarantee floor prices, and provide fertilisers and seeds. They also controlled import volumes, redistributed food where there were production shortfalls, and purchased commodities from cooperatives.

These marketing boards were not always run in the best possible way; there were many instances of corruption or inefficiency, but they did fulfil certain critical functions. Farmers were provided a market to sell their produce to, which meant they had a livelihood. Prices were stable even though they were often lower than what farmers would have liked.

As a result of these policies, many developing countries were either net food exporters, or at least were nearly food self-sufficient.

All that has changed over the last 20 years. Investment support to farmers was done away with. Small farmers were told to produce for the international market, and their markets were opened to producers from outside. Rather than supporting staple crops, government support went to the export sector. Since all would specialise in the products where they had 'comparative advantage', gains were supposed to accrue all round.

But rather than producing winners, millions of the poorest subsistence farmers were knocked out of their own markets. Imports took over what was previously produced by local people. Over the last 20 years, the production capacity in many countries has severely diminished.

The Philippines has been one prime example of such policies. "During the 60s and 70s, we were self-sufficient," Jowen Berber of Centro Saka, an NGO working on agrarian issues with farmers, told IPS. "That was the time that the government was heavily investing in rice – irrigation, infrastructure, marketing support and production support such as credits and inputs. But when the government stopped those incentives and subsidies, rice production slowly decreased."

Berber said "the acreage of irrigated land has also been falling because the government has not been maintaining irrigation facilities. We also have a very high level of post- harvest losses in rice – up to 35 percent because our post-harvest facilities are very old."

Instead of supporting farmers with guaranteed prices as before, Berber said "the government now intervenes to buy less than 1 percent of the domestic rice that is produced. They are buying more imported rice than our own local rice."

A study on import surges by David Pingpoh and Joean Senahoun, commissioned by the UN's Food and Agriculture Organisation (FAO) in 2006, noted that the Cameroon government support to the rice sector was removed in 1994 through implementation of IMF and World Bank policies. The fertiliser market was privatised. Rice yields of poor farmers dropped as fertilisers became unaffordable. Tariffs were liberalised, and annual rice imports doubled from 152,000 tonnes to 301,000 tonnes between 1999 and 2004.

This opening rendered the country vulnerable to the policies of other countries. At the time, India was de-stocking its rice surplus, and rice imports from India increased from 7,900 tonnes in 2001 to 60,300 tonnes in 2002. As a result of this import surge, rice farmers were hard hit, and many left the sector. Land for rice cultivation dropped 31.2 percent between 1999 and 2004.

According to the FAO, Cote d'Ivoire also saw imports flooding in when the market was opened up. As a result of implementing commitments at the WTO, Cote d'Ivoire removed import restrictions on key agricultural goods, particularly rice. Duty on all agricultural products was set at a maximum of 15 percent, except for 25 tariff lines.

As a result, rice imports increased at an annual rate of 6 percent from 470,000 tonnes to 715,000 tonnes between 1997 and 2004. Imports were mainly from Thailand, China and India. Domestic production dropped 40 percent over this period.

In Nepal, the civil society organisation ActionAid documents that rice import surges came in 1994, 1996 and 2000, with imports increasing by 175 percent, 55 percent and 800 percent respectively. From 24,500 tonnes imported in 1999, by the year 2000 imports had hit 195,000 tonnes. The porous borders between Nepal and India, and the Nepal-India Trade Treaty were widely seen as the cause of these surges. In certain areas of Nepal, domestic prices fell by nearly 20 percent. The southern belt bordering India saw a multitude of rice plants and rice mills shutting down.

Today, in the latest twist of events, food prices have increased due to global shortfalls. Food production has been redirected towards biofuel production. Drought in Australia has contributed to shortages on the world market. Speculators playing on commodity markets have further increased prices.

Up to 37 countries have been gripped by protests and riots. In Cameroon, seven people were killed in the unrest in February. Food riots also took hold of Abidjan in the Cote d'Ivoire in March this year.

At meetings in Berne in Switzerland to address the global food crisis, UN Secretary- General Ban Ki-Moon, World Bank president Robert Zollick and WTO director-general Pascal Lamy again made a plea for more free trade the panacea. But farmers remain unconvinced that more of the same policies that have contributed to the last two decades of destruction of agriculture can help.

Reacting to the push by the WTO leadership, the World Bank and the UN to stitch up the Doha Round so that further liberalisation can assist in resolving the food crisis, Henri Saragih, international coordinator of the global network of peasant farmers La Via Campesina writes, "Protecting food has become a crime under free trade rules. Protectionism has become a dirty word. Meanwhile, countries have become addicted to cheap food imports, and now that prices are shooting up, hunger is raising its ugly head."

Excerpt:

By Aileen Kwa
GENEVA, May 8 2008 (IPS)

The issue of rising food prices was raised at the WTO&#39s General Council meeting Wednesday, and for the first time, discussed in some detail. But there remains, as one African delegate put it, "a lot of confusion about the rising prices of commodities and the Doha Round. Somebody needs to demystify the links. The D-G (Director-General) is using this as a bait to catch us on concluding the Round as soon as possible."

At the WTO General Council meeting, the Director-General Pascal Lamy said a quick conclusion of the Doha Round was a means of offering "medium to long-term solutions to the current crisis…We all aim to substantially lower barriers to trade in agricultural products and diminish levels of trade distorting subsidies, particularly in developed countries that have hampered food production and investment in agriculture in many developing countries. This is doable and we are nearly there."

Should the Doha Development Round (the negotiations towards concluding a single global trade agreement launched in Qatar capital Doha in November 2001) be completed, Lamy asserted that "the overall outcome would be less distortion in world markets and increased international trade, leading to more rapid and efficient adjustment by supply to changes in demand."

"The food crisis really has nothing to do with the DDA (Doha Development Agenda)," said a developing country delegate. "In fact, what they should do is to give us more Special Products so that we protect those products and try to be efficient in food production. That should be the way to go around it so that we should produce more food."

Forty-six developing countries at the WTO, the G33, have long been arguing for the protection of a range of Special Products (SPs) from tariff cuts. These are products such as rice, wheat, soya and dairy products that are important for food security, rural livelihoods and employment.

"The D-G is talking about removing the distortions," the delegate said. "Yet this will not address the supply-side constraints. How then will the problem be reduced? I don&#39t think we should hurry to conclude the Round because of the rising prices of commodities."

Another developing country delegate, also speaking off the record, said that the G33 has been talking about SPs and the Special Safeguard Mechanism (SSM) for the past six or seven years. The Special Safeguard Mechanism allows countries to increase tariff levels in the event of import surges. "If we had been heard and taken seriously way back then, maybe we would not have this crisis now."

Referring to those citing the crisis as a reason for forcing the Round to a rapid conclusion, he said "they are talking about shifting supplies around. We are talking about production and how we can increase our own production to meet domestic demand. That is the long-term solution."

Last week, the Swiss and Japanese delegations had put forward a proposal in the WTO calling for limits on the extent to which countries could put in place export restrictions in agriculture. In recent months, a number of countries have placed export bans or increased export taxes on rice, maize, corn, wheat, soy and other commodities.

These countries include Argentina, Cambodia, China, Egypt, Ethiopia, Guinea, India, Indonesia, Kazakhstan, Malawi, Russia, Serbia, Tanzania, Ukraine and Zambia.

Apart from the European Union, a large number of countries said that they could not support the Japanese and Swiss proposal on the grounds that they wanted to have policy space. Those very strongly opposed included Argentina, Brazil, India and China. So far, WTO rules have been more stringent about reducing countries&#39 import barriers, but have permitted countries more policy space in the area of controlling their exports.

At the General Council meeting Wednesday, a significant number of developing country delegations did support the D-G&#39s position that a quick conclusion of the Doha round would aid the food crisis. Uruguay, which traditionally has been pushing for more rapid agricultural liberalisation, reportedly made a long statement stating that Doha would reduce subsidies for inefficient production and create a more equitable food trading system. Should members miss concluding the round by 2008, Uruguay ambassador Guillermo Valles Galmés said, it may take another 10 to 15 years for the round to be re-launched.

Brazil, also keen to conclude the round, said that Doha, by helping remove trade distortions, can help in reducing the food crisis, provided development is at the heart of the negotiations. Likewise Mexico&#39s ambassador Fernando Mateo said that trade liberalisation was not the cause of the food crisis, but is part of the solution. China also cited the food crisis as a reason for a quick Doha conclusion. For them, the issues of Special Products and the Special Safeguard Mechanism were central.

The Indian delegation commented on Doha, but did not mention any links to the food crisis.

According to WTO spokesperson Keith Rockwell, given the tight timelines, it is doubtful that ministers (a selected number) will meet in Geneva in May. But such a ministerial is being planned for the coming weeks.

Negotiators in Geneva are attempting to race through the sticking issues in the agriculture negotiations. According to the D-G&#39s plan, revised texts will then be issued. There will be some time provided for these texts to be considered within the negotiating groups. Senior officials will then be called to Geneva, leading to a mini-ministerial meeting.

Most speculate that the ministerial will take place in July. The Swiss authorities have refused to host such a ministerial in June given that Switzerland is hosting the European soccer tournament that month. They have said their security forces will be completely occupied with that event.

Excerpt:

By Aileen Kwa
GENEVA, Apr 21 2008 (IPS)

The rising food and fuel prices, with related social destabilisation, may necessitate a ‘‘course correction’’ in the liberalisation talks on industrial goods and agriculture, the African, Caribbean and Pacific group of nations told World Trade Organisation (WTO) Director General Pascal Lamy at the end of last week.

Lamy announced to the WTO’s trade negotiations committee on April 18 that he wants to conclude the negotiations on agriculture and non-agriculture (industrial goods) market access (NAMA) in May. In response, developing states from Africa, the Caribbean and Pacific (ACP) regions warned Lamy about following the agreed sequence of steps in the talks.

As one African negotiator commented afterwards on condition of anonymity, ‘‘Lamy is giving the same story: that we are making a lot of progress and we expect revised texts very soon. In contrast, we are saying we are not yet ready for ministers to decide on texts.

‘‘We have made much progress in agriculture, but a ministerial (meeting) would be premature. We would be taking a step backwards because people will resist.’’

Lamy said that negotiations will move to a higher level, the so-called ‘‘horizontal process’’, by May 5 when trade-offs will be made between agriculture, NAMA and some other issues. This will involve only about 25 to 30 invited senior officials in Green Room meetings (closed meetings with selected member states). After that, Lamy intends to host a week of Green Room ministerial meetings.

He did not mention specific dates for the mini-ministerial meeting but, as of last week, it is widely known that the WTO Secretariat is making preparations for hosting ministers in the week of May 19. Such a ministerial meeting would then culminate in a meeting of the entire membership at the level of the trade negotiations committee to rubberstamp the outcome.

Representing the ACP countries at the meeting on April 18, Ambassador of Jamaica Gail Mathurin reminded the director general of the following: ‘‘The ACP group wishes to recall that we supported the process which you outlined at the last meeting of the trade negotiations committee, that is, to continue working in the negotiating groups (which deal with the agriculture and NAMA issues) in order to develop, in a balanced way, full modalities (rules), especially on agriculture and NAMA.

‘‘This would lead to revised texts which we would have an opportunity to review in our capitals, in our respective groupings and in the respective negotiating groups before moving to a horizontal process and eventually to a meeting of ministers. This was recognised as a process which would give comfort to all members,’’ said Mathurin.

‘‘I note that you are still committed to continuing that approach… We would not want to see this approach jeopardised by the introduction of artificial timeframes.’’

She went on to state that ‘‘the ACP group represents a vast constituency of the WTO membership and it is important that the views of its members be fully taken on board in these negotiations. While there has been progress in many areas of the negotiations, there are still many issues to be further addressed and many of these concern the interests of the ACP group.

‘‘We are just (starting to see) momentum on some of the issues of concern to the ACP group. We wish to place on record that we will not accept being pressed to enter a horizontal process with partial modalities,’’ Mathurin added. ‘‘Partial modalities’’ refer to agreement on some issues while leaving out others.

Interestingly, Mathurin cautioned the director general that, ‘‘our countries are grappling with various policy alternatives in order to address the rapid and continuing rise in food and fuel prices, along with the potential for social instability. It is important to draw lessons from the current crisis. This might necessitate a course correction’’.

Some developing country delegates commented later that Lamy did not attempt to address the need for more time the majority of members had spoken out about.

What are some of the outstanding issues in the negotiations? Last week, talks on ‘‘sensitive products’’ broke down. These are products that the developed and large developing countries would like to protect.

The Group of Six, including the U.S., EU, Brazil, Canada and Australia, disagreed among themselves about their own joint proposal. Any outcome on this issue would impact on many of the smaller countries which export to the EU.

Closely related to this is the direct clash between small countries on market access. ‘‘Tropical products countries’’, such as Costa Rica and Ecuador, are pushing for faster liberalisation of their exports to the EU. The ACP countries, on the other hand, are fighting for measures to help them deal with ‘‘preference erosion’’, which refers to the loss of preferential treatment of their products due to liberalisation.

They want the EU to undertake a slower liberalisation process in relation to its non-ACP trading partners – particularly for those products which the ACP currently exports to the EU under preferential terms. Unfortunately, there is considerable overlap in the list of tropical and preference products, including bananas and sugar. How this issue will be resolved remains a puzzle.

Also unresolved are the issues developing countries have for years been fighting for to safeguard rural livelihoods and food security: the special products and special safeguard mechanism clauses.

In the special products (SP) negotiations, where developing countries want slower or no liberalisation on products important to food security and rural livelihoods, negotiators are far from agreeing on the details of how these products will be designated.

They are also yet to agree on the percentage of tariff lines that can enjoy SP treatment; and the highly contentious issue of whether some products could be exempted from tariff cuts. In talks last week, the U.S. and a group of exporting countries, including New Zealand, Australia, Canada and Thailand, submitted a proposal that was clearly aimed at watering down the proposal of the SP proponents.

Equally, there is no consensus on the special safeguard mechanism (SSM). The SSM would eventually allow developing countries to impose higher tariffs in the event of large agricultural import surges. There is no agreement on product coverage (how many tariff lines will be covered by this mechanism), how it will be triggered and what the remedies might be.

An agriculture meeting on Friday, chaired by New Zealand’s Ambassador Crawford Falconer, again saw the majority of members asking for more time before he releases the next version of his agriculture text. It looks unlikely, therefore, that Lamy’s timelines for May will materialise.

At the forefront of attempting to push the current Doha Development Round of WTO negotiations to a hurried conclusion are the WTO Secretariat, the European Union, Brazil and the U.S.’s Bush administration. The Indians on the other hand, breaking ranks with Brazil on this issue, have been expressing grave doubts about whether a conclusion in May is possible.

Negotiators are likely to aim for a mini-ministerial meeting to be held only in July.

* Expert writer Aileen Kwa is an independent trade policy analyst on leave from Focus on the Global South, a non-governmental organisation that engages in policy research and activism to generate critical analysis and debate on globalisation and neo-liberalism. This article is the second in a series of two.

Excerpt:

By Aileen Kwa
GENEVA, Apr 21 2008 (IPS)

World Trade Organisation (WTO) Director General Pascal Lamy announced at the end of last week that there will be a limited ministerial ‘‘signalling’’ conference on services trade chaired by himself.

No dates were given but it is expected that it will take place with a mini-ministerial meeting planned for May 19 which deals with the issues of non-agricultural market access (NAMA) and agriculture. He indicated that senior officials will already begin negotiations in Geneva on May 5. Most in Geneva, however, do not believe that this timeline can be met.

The ‘‘signalling’’ conference will focus specifically on market access: participants are expected to ‘‘signal’’ to each other the extent to which they are prepared to liberalise their services sectors.

According to Lamy, ‘‘any outcome on market access among participants in the plurilateral process will be automatically extended on an MFN (most favoured nation) basis to all members’’. This comment has worried many developing country negotiators.

‘‘Plurilaterals’’ refer to negotiations between a subset of WTO members. The outcomes of such talks are, in theory, only binding on those members. MFN refers to each member state granting trade advantages equally to all trading partners.

He also said that ‘‘participation in the signalling conference would be, more or less, among members participating in the plurilateral request and offer negotiations, plus representatives of regional groupings – all in all, similar to the format of the ministerial Green Room.’’

This would mean that only the developed countries, the emerging developing countries and a few others will be included in these meetings. These are the countries that account for most of world services trade. The bulk of WTO members, however, would not be involved.

As chairperson of the signalling conference Lamy said he would provide an oral report to the trade negotiations committee, where he made the announcement on April 17.

The main elements of the report would include ‘‘a description of the sectors and modes of delivery discussed and the signals exchanged regarding new or improved commitments which participants would be ready to undertake’’. The conference will probably last one day.

In the corridors of the WTO there was great unhappiness about this signalling conference by those who have been excluded from the small group services meetings and who will not be party to the conference. Many are worried about the implications for their countries.

One African delegate, whose delegation is not involved, spoke to IPS on condition of anonymity, given the sensitive nature of the issue. He said that ‘‘the conference is being pushed by the developed countries. Even though we are not involved, our fear is that what they agree among themselves will impact on us.

‘‘This can happen in two ways. One, the outcome can be used as a benchmark for other members who are not participating.

‘‘Second, we cannot refuse or oppose other members from coming together. However, what is the implication in terms of the multilateral process when we have the secretariat directly involved? The director general (DG) is chairing the meeting himself. The involvement of the DG (undermines) the neutrality we expect of the secretariat’’.

He went on to ask, ‘‘will the DG then say, the plurilateral group has achieved this. Those who have not participated, can you achieve two-thirds of what was achieved?’’

Services trade is of major interest for both the U.S. and the European Union (EU). There has been intense lobbying by U.S. and EU business groups in Geneva in recent weeks.

What could happen – and this would be very dangerous for all countries, including those who are not participating – is that the conference becomes the starting point for ‘‘sectoral’’ negotiations. Sectoral negotiations constitute the formalisation of negotiations on specific services sectors.

It takes place when there is a ‘‘critical mass’’ of countries involved, as was the case after the Uruguay Round in telecommunications and financial services. ‘‘Critical mass’’ refers to the countries that contribute to most of the trade in that sector. The eventual outcome is a common template of liberalisation in each sector under negotiations.

This regulatory template or framework tends to put liberalisation, ‘‘pro-competitive’’ objectives and the rights of foreign firms ahead of national objectives such as universal provision of services. This may therefore not advance developing countries’ interests.

In 2004, the WTO’s dispute panel ruled against Mexico in a case brought to the WTO by the U.S.. The U.S. said that Mexico’s regulations were anti-competitive and contravened the Telecoms Reference Paper – the regulatory framework that resulted from the telecommunications sectoral negotiations.

The panel ruled that Mexico had failed to provide American basic telecommunication suppliers with equal access to and use of public telecommunication networks and services. The Mexican company Telmex had charged the U.S. supplier higher interconnection rates.

Mexico tried to defend its regulations on the basis that they were designed to include the costs for rolling out telecommunications infrastructure, a need of many developing countries.

The panel, however, accepted the U.S. argument that the rates charged should be based solely on the specific services foreign companies required. No contribution to the development of Mexico&#39s telecommunications infrastructure could be included in the rate because Mexico had adopted the Reference Paper.

Even though countries may choose not to sign on to such a regulatory template, once such a template has been adopted by a ‘‘critical mass’’ of states and it is formally part of the multilateral framework, there is a de facto, hidden obligation on all.

In theory, the countries that are non-signatories can ignore such a ‘‘benchmark’’. However, in practice, bound under international law, it becomes a minimum norm which would be used by foreign investors and trading partners to evaluate countries. This norm will be seen as the minimum guarantee to protect their interests.

*Expert writer Aileen Kwa is an independent trade policy analyst on leave from Focus on the Global South, a non-governmental organisation that engages in policy research and activism to generate critical analysis and debate on globalisation and neo-liberalism. This article is the first in a series of two.

Excerpt:

By Aileen Kwa
GENEVA, Mar 7 2008 (IPS)

The Group of 33 developing countries has denounced the draft text on the special safeguard mechanism in the current Doha Development Round of World Trade Organisation (WTO) talks as ‘‘extremely inadequate… stringent, restrictive, burdensome (and) ineffective’’.

The special safeguard mechanism (SSM) has been proposed in response to the frequency of food import surges into developing countries’ markets over the past two decades.

Many of these countries had lowered their tariff levels, usually as a result of the international financial institutions’ structural adjustment programmes, leading to the closure of production plants, increased rural unemployment and a deepening in the agrarian crisis in many such countries.

The mechanism proposed by the Group of 33 (G33) would allow developing countries to increase their tariffs when import volumes surpass pre-existing import volumes by certain amounts. Higher tariffs can also be invoked if import prices fall beneath certain levels.

The text was proposed by the chairperson of the agriculture talks, New Zealand ambassador Crawford Falconer. The G33 represents a total of 46 developing countries in the WTO.

The mechanism is a trade measure supported by a diverse group of developing countries. This group is led by Indonesia and is composed of countries from all regions: India, China, the Philippines, Nigeria, Kenya, Senegal, Tanzania, the Dominican Republic, Jamaica and Bolivia, to name only a few.

The denouncement of the text has moved the talks into a stalemate. The ‘‘chair’s text’’, as Falconer’s draft text is called, contains ‘‘multiple limitations which in the end would only provide an ineffective mechanism’’, as the G33 said at a meeting last week.

To complicate matters further, three developing countries which export agricultural commodities – Argentina, Uruguay and Paraguay – have recently proposed even more restrictions than the chair’s draft.

According to a G33 delegate, who spoke on condition of anonymity to IPS due to the sensitivity of the talks, ‘‘the SSM is a big problem. There is a heated debate on this issue. The chair’s text is the first time we have a full text on the SSM issue but we didn’t like what he did’’.

According to this delegate, the discussions are going ‘‘the wrong way’’ because Falconer wants to limit the number of invocations or times when the SSM can be invoked.

Also, Falconer wants a higher trigger, which refers to import surge volumes having to be high before the mechanism can be activated. He also wants to restrict it to only the Uruguay Round bound rate, which refers to the level at which import tariffs were bound during the round of global trade talks before the current Doha Round.

Said the delegate, ‘‘there are layers and layers of restrictions. The mechanism may ultimately not be effective. And now we have this new proposal by Argentina and others which is even more restrictive!’’

While the G33 had asked for the SSM to cover all products, the chair had suggested in brackets – meaning that the exact number is yet to be finalised – that the SSM can only be invoked during any given 12 month period for between three to eight tariff lines.

This is despite countries usually having multiple tariff lines for a single product. Three to eight tariff lines might cover less than a single product.

In response, the G33 has argued that this restriction is ‘‘unacceptable’’. According to the statement which Indonesia made on behalf of the G33, the restriction ‘‘makes it virtually impossible for developing countries and least developed countries (LDCs) to operationalise the SSM.

‘‘It is impossible to decide, in advance, what products and sections or tariff lines may be vulnerable to import surges or price depressions in the future,’’ according to the statement.

Research which the United Nations’ Food and Agriculture Organisation (FAO) published in 2005 shows that up to 12,167 import surges were recorded between 1980 and 2003 for 102 developing countries. This translates into, on average, a total of five occurrences of import surges a year per developing country.

In a 2003 study on the same topic (‘‘Some Trade Policy Issues Relating to Trends in Agricultural Imports in the Context of Food Security’’) the FAO looked at 28 countries and eight commodities. The latter were wheat, rice, maize, vegetable oils, bovine meat, pork, poultry meat and milk.

It concluded that, at any given time, there was a 33 percent likelihood that an import surge was occurring in each product and in each country. Worse still, the price slumps for primary commodities could linger for significant periods of time: between 25 months for coconut oil to 70 months for bananas.

The FAO also found that the impact of these import surges on local production was severe. In Senegal, tomato paste imports from Europe had increased 15-fold and local production dropped by 50 percent. In Burkina Faso, tomato paste imports increased fourfold and cut local production by half.

In Jamaica, the doubling of imports of vegetable oils cut local production by 68 percent. In Kenya, dairy imports had increased ‘‘dramatically’’ with the effect that local milk sales fell as dramatically.

The other controversial aspect of the SSM has to do with the level that import surges would need to reach before the safeguard can be invoked. The group had proposed that countries should be able to invoke the SSM when an import surge reaches a level of five percent more than a previous three year average.

The chair had included this figure in brackets but he also included the alternative figure of 30 percent which opponents of the SSM had put forward. Research shows why this would be problematic.

In Nepal, rice farmers’ incomes shrank by between 40 and 50 percent and milling factories closed down when imports increased by what seems like a measly seven to eight percent. This was found in a study that ActionAid Nepal conducted into Nepal’s experience as a result of rice import surges from India when the latter went through a ‘destocking’ exercise in 2001/2002. The non-governmental ActionAid focuses on development and human rights.

Apart from these issues, there is the controversial matter of whether countries acting to stymie an import surge are allowed to raise tariffs above the tariff levels which they had committed themselves to during the Uruguay Round. The chair’s text disallows this. But the G33 is adamant that this be included.

Indeed, an existing safeguard mechanism called the special safeguard clause limited for use only by a few countries in the WTO allows for this. It has been used principally by the EU and U.S..

Indonesia, on behalf of the G33, said ‘‘for us, we remain firm that the basic principle must and shall be that all developing countries, including LDCs and small and vulnerable economies, be entitled to the remedies that can go beyond the Uruguay Round bound level’’.

*The first article in a two-part series

Excerpt:

By Aileen Kwa
GENEVA, Mar 7 2008 (IPS)

Food import surges have had devastating consequences for the rural poor and local economies in Africa. Such surges have taken place with alarming frequency in the past decade or two.

This explains why the Group of 33, which represents 46 developing countries at the World Trade Organisation (WTO), has placed such high importance on their proposed special safeguard mechanism in the current Doha Development Round talks.

In the past year, the Food and Agricultural Organisation (FAO) in its ‘‘FAO Briefs on Import Surges’’ has released a number of case studies documenting some of these surges and their effects. The following are some examples.

In Ghana rice imports increased from 250,000 tonnes in 1998 to 415,150 tonnes in 2003. Domestic rice, which had accounted for 43 percent of the domestic market in 2000, captured only 29 percent of the domestic market in 2003. In all, 66 percent of rice producers recorded negative returns, leading to loss of employment.

Tomato paste imports from the EU increased by a staggering 650 percent from 3,300 tons in 1998 to 24,740 tons in 2003. Farmers lost 40 percent of the share of the domestic market and prices were extremely depressed.

In Cameroon, poultry imports increased nearly 300 percent between 1999 and 2004. Some 92 percent of poultry farmers dropped out of the sector. A massive 110,000 rural jobs were lost each year from 1994 to 2003.

In Cote d’Ivoire, poultry imports increased 650 percent between 2001 and 2003, causing domestic production to fall by 23 percent. As a result, prices dropped, forcing 1,500 producers to cease production and the loss of 15,000 jobs.

In Mozambique, vegetable oil imports (palm, soy and sunflower) saw a fivefold increase between 2000 and 2004. Domestic production shrank drastically, from 21,000 tonnes in 1981 to 3,500 in 2002.

About 108,000 smallholder households growing oilseeds have been affected, not to mention another 1 million families involved in substitute products (soy and copra). Small oil processing operations have closed down, resulting in the termination of thousands of jobs.

The effects of import surges were also seen elsewhere in the developing world. For example, onion imports in Jamaica led to the virtual collapse of the industry over the last 15 years. Dairy imports saw 50 percent of diary farmers selling their animals and going out of business since the liberalisation of the 1990s. Employment in the sector in 2004 had fallen by two-thirds that of 1990 levels.

Dairy imports in Sri Lanka increased from 10,000 tonnes in 1981 to 70,000 tonnes in 2005, consuming 70 percent of the domestic market. Domestic producers have not been able to develop and expand their market share. During this period, local production expanded by less than 15 percent.

There are countless more such cases which FAO and others have documented: dairy, maize and sugar in Kenya; rice and vegetable oils in Cameroon; onions and rice in the Philippines; rice and soy in Indonesia; maize, sugar and milk in Malawi; rice, dairy and maize in Tanzania; poultry in Jamaica; oilseeds in India; onions and potatoes in Sri Lanka; tomato paste in Senegal; soy and cotton in Mexico; rice and poultry in the Gambia; rice in Haiti and so forth.

Import surges follow in the wake of liberalisation of trade. Liberalisation brings into play multiple factors that are often beyond the control of importing countries. These include firstly the domestic support and dumping policies of exporting countries. The products in which import surges occur most frequently are also the products which receive the highest subsidies from the EU and the U.S..

Other factors are: currency fluctuations in third countries; dumping of food aid when it is not required; and policy whims of exporting countries, such as destocking exercises which cause surges on the world market.

When Ghana reduced its rice tariffs from 100 to 20 percent as a result of the structural adjustment policies enforced by the World Bank, rice imports doubled.

In Cameroon, lowering tariff protection to 25 percent saw poultry imports increase by about six-fold. The EU’s domestic supports to poultry farmers have had a devastating effect elsewhere too. In Senegal, 70 percent of the poultry industry has been wiped out in recent years because of EU poultry.

EU milk exports have had similar effects on countries from Jamaica and the Dominican Republic to Kenya and Uganda.

Currency fluctuation of third countries also plays a role. When the Brazilian real lost a third of its value against the U.S. dollar in 2001, there was a sharp increase in Brazilian poultry exports. Cameroon, simply because it had porous borders, saw poultry imports originating from Brazil increase by 885 percent.

When the Russian ruble fell against the dollar in 1998, the U.S. as the primary exporter of poultry to Russia directed its poultry to third countries. Cameroon, which had not imported poultry from the U.S. in 1999, imported 639 tons in 2000, again with devastating consequences on local producers.

These cases, documented by the FAO, should lead negotiators to exercise caution in the current Doha talks on the special safeguard mechanism. Import surges are already happening, even before yet another round of liberalisation as is under negotiation in the current Doha Round.

Effective measures should be made available to developing countries if food security and rural livelihoods are to be given priority.

*The second article in a two-part series

Excerpt:

By Aileen Kwa
GENEVA, Feb 29 2008 (IPS)

The World Trade Organisation’s beleaguered Doha Round could either be wrapped up in the next two to three months or be stalled for an indefinite period of time.

There is a huge amount of uncertainty in Geneva about how the talks will pan out this year. Some member states insist that, despite the current negotiating frenzy, no movement will be possible. Others are worried that the upcoming ‘‘Green Room’’ process will be used to bamboozle the majority of members into an undesirable outcome.

‘‘Green Room’’ refers to closed-door negotiations held among a limited number of delegations at the World Trade Organisation (WTO).

Revised negotiating texts were released on February 8. Since then, the talks have been merely ‘‘exploratory’’, as characterised by an African negotiator. ‘‘It is all very unpredictable.’’

An initial plan for a closed-door meeting of a small group of ministers around Easter time in March has now been rescheduled for April. It remains unclear if the April target can be achieved. According to a negotiator from a major developing country, ‘‘I still think it can be done but every time I do my sums they do not add up’’.

Referring to the lack of interest on the part of the U.S. in the context of their November presidential elections and the recent statement by France that 20 European Union (EU) countries reject the revised agriculture draft text, he said, ‘‘we are more or less running out of time and the U.S. still doesn’t seem to move much.

‘‘The EU, which was the one pushing for a conclusion of the talks, seems to be doing things which will not help. They are digging in their heels, probably for internal political reasons.’’

While the prospects for a conclusion of the Doha Round are far from bright, he said that there was still a possibility. ‘‘The U.S. and EU can change their positions.’’

Those in Geneva pushing for a conclusion of the Round – the European Commission and Brazil – seem to be giving themselves a timeline of up to May to do so. They are working on the premise that the Bush administration may still be able to convince the U.S. Congress to sign off on a Doha package.

Analysts in Washington, however, think that that window of opportunity has long passed.

The European Commission also wants a package sealed before the French take over the EU presidency in July. The Commission is also keen to conclude the Round in order to be ‘‘paid’’ for the reforms it has made to its common agricultural policy.

Brazil has wanted the Round to conclude in order to advance its agricultural exports, although not at any cost. Recently, the talk in Geneva is that Brazil’s trade minister, Celso Amorin, who used to be Brazil’s ambassador to the WTO, has his eye on the WTO director general position. This is perhaps also contributing to Brazil’s enthusiasm in pushing for a ‘‘successful’’ outcome.

The likelihood for a conclusion, however, looks dim. The revised text of February 8 on agriculture contains myriad number of brackets, meaning many issues remain unresolved. One major and as yet unresolved issue for the majority of developing countries is the special safeguard mechanism (SSM).

The SSM should allow developing countries to raise their tariffs, should they be hit by damaging food import surges. According to an African negotiator, ‘‘the SSM is a big problem. We do not like what is in the chair’s text’’, referring to the chairperson of the agriculture talks.

The chairperson’s proposals are much more restrictive than what the Group of 33 (now including 46 developing countries) has been asking for.

On February 22, the chairperson of the agriculture negotiations, New Zealand’s ambassador Crawford Falconer, reportedly told the membership that the discussions of the past two weeks on the revised draft have not borne fruit. There have been no substantial breakthroughs.

If positions remain entrenched into March, he said that he could not promise the membership that he would be able to issue another version of the agriculture text.

The most strident complaints, however, have been in reaction to non-agricultural market access (NAMA) which is about the liberalisation of industrial products. The latest version showed no significant differences from the previous July version which the majority of developing country members had rejected.

Given the major gaps that remain, some negotiators in Geneva are worried about the process that WTO director general Pascal Lamy is preparing to orchestrate in the coming weeks.

Technical discussions are likely to conclude by the end of February. By early March, it is expected that the ‘‘horizontal’’ process will commence, which refers to closed door ‘‘Green Room’’ discussions led by Lamy and confined to 30 or so delegations.

These discussions will be held at level of senior officials and ambassadors. Many members regard the technicians in Geneva as having more savvy than senior officials in their understanding of the negotiating details.

The negotiations on agriculture and NAMA will happen simultaneously in order for concessions to be made across these issues. The EU and India are also pushing for services to be included.

Lamy hopes that through this horizontal process most of the remaining gaps will be addressed. This would then culminate in a ‘‘mini-ministerial’’ meeting in April.

The EU also wants a ‘‘signalling’’ conference to be held on services at the time of such a ministerial meeting where these 30 or so countries would make commitments about how far they would go in further liberalising their services sectors.

This ‘‘Green Room’’ ‘‘horizontal process’’ is worrying to some of the smaller developing country delegations. In the past these closed door processes have been used to pick off developing countries one by one, and arm-twist them into compliance.

According to an African negotiator, ‘‘members should continue discussing the text until the substance is ready for political decisions. We should not be forced into the horizontal process or into a mini-ministerial before the substance is ripe. This should be a substance-driven process and not an attempt to meet some target, such as Easter’’.

Nevertheless, he continued, ‘‘I don’t think we will make it this year even though we are very close. The issues remaining in agriculture can be resolved. It could be possible if the political situation were ripe’’.

Another negotiator quipped, ‘‘if it cannot be concluded in March, I don’t see how it can be concluded in April’’. The danger is that a text biased against small developing countries’ interests could be sealed and then picked up when the Round is resurrected.

*The first in a two-part series

Excerpt:

By Aileen Kwa
GENEVA, Feb 29 2008 (IPS)

The Doha Round negotiations on industrial products have once again come under fire at the World Trade Organisation (WTO), with developing countries such as South Africa saying that the proposed tariffs cuts will spell the end of their industrial development.

Member states are upset because the latest draft of the text of the industrial product negotiations, also called non-agriculture market access (NAMA), has not changed significantly from the July 2007 text. The chairperson of the negotiations, Canadian ambassador Donald Stephenson, released the newest draft on February 8. The July version had come under heavy criticism from most developing countries.

Last week, Brazil complained bitterly about the double standards which the U.S., EU and others maintain in the negotiations: being defensive in agriculture, but extremely offensive in NAMA.

‘‘In the agriculture negotiations we are told that we must show flexibility and compromise for two compelling reasons: one size does not fit all; and there are limits beyond which delegations cannot go. In NAMA, however, the same delegations that seek flexibility and understanding in agriculture utterly ignore those two principles.

‘‘In NAMA, one size must fit all and limitations are characterised as ‘lack of ambition’,’’ said Brazil’s representative.

The Brazilian delegation rejected accusations that they lack ‘‘ambition’’ in the NAMA negotiations. ‘‘Under no circumstances will Brazil compromise its industry… There is simply no price for that. The level of ambition of this Round in NAMA is unprecedented under any standards, so let’s not talk about ‘lack of ambition’.

The ‘‘new market access’’ its negotiating partners are seeking, said Brazil, are ‘‘not just a set of empty words. Those words mean restructuring of the productive capacity in developing countries.’’

Stephenson had proposed a range of coefficients between 19 and 23 for developing countries. A coefficient is a negotiated number that will be inserted into the tariff cutting formula. The higher the coefficient, the smaller the tariff cut a country has to make.

With a coefficient of 20, Brazil with average bound tariffs of 30.8 percent will have to cut these tariffs to an average of 12.1 percent. This constitutes a massive 61 percent cut.

According to Kjeld Jakobsen of Brazil’s main trade union, known by the acronym CUT, the affected sectors will include chemicals, capital goods, textiles, automobile, shoes and others. Over two million jobs are at stake.

On February 18, a group of trade unions from the grouping called the NAMA 11 – South Africa, Argentina, Brazil, India, the Philippines, Indonesia and Tunisia – issued a statement denouncing the chairperson’s draft, particularly the range of coefficients in the text.

‘‘Like the July 2007 draft, we consider the proposed range of coefficients for developing countries unacceptable. These coefficients will lead to cuts in applied rates (actual tariff rates) in our countries and will thus affect employment.

‘‘They will lead to low bound (tariff) rates across the board and thus hamper industrialisation processes in our countries. The reductions that developing countries are asked to make are much higher than the developed country reductions,’’ said the unions. The unions also pointed out that their governments ‘‘had indicated in July last year that this range was not acceptable. However, in the new text, the same range is again included. The positions of our countries therefore do not seem to be taken into account.’’

The trade unions stated further than ‘‘competition and unemployment are already too high to further compromise the position of workers through high tariff cuts in NAMA’’.

According to research done by the Congress of South African Trade Unions (COSATU), the major trade union federation in South Africa, if a coefficient of 20 is used, 40 percent of South Africa’s applied tariff lines would have to be lowered.

The affected sectors would include clothing, automobiles, footwear, textiles, electronic components and furniture. The union concludes that this would spell the end of industrial development in South Africa.

*The second in a two-part series

Excerpt:

By Aileen Kwa
GENEVA, Feb 26 2008 (IPS)

The European Union is determined to get those African countries on board which have so far kicked against the economic partnership agreements (EPAs). At the end of 2007, only 35 out of 78 African, Caribbean and Pacific (ACP) countries had initialled EPAs.

Apart from the 15 Caribbean countries which had initialled a full EPA, the other 20 African and Pacific countries had agreed to interim agreements which only cover the liberalisation of goods and agricultural products.

Many ACP countries had major misgivings about the EPAs. But most of those without least developed country (LDC) status were threatened by the possibility of having their exports disrupted. This would have happened at the expiry of their Cotonou agreement market access preferences to the European Union (EU) at the end of December. Thus they caved in.

In contrast, the pressure was not that great on LDCs as they are able to continue their exports to the EU under the Everything-But-Arms trade provision. The only non-LDC countries that did not initial EPAs were Nigeria, Congo-Brazzaville, Gabon, South Africa and seven Pacific Island states.

The two regions that were most opposed to the EPAs were West Africa and the Pacific. Both these regions saw only two countries each signing on, Cote d’Ivoire and Ghana and Fiji and Papua New Guinea respectively.

Most of the West African states refused to initial an interim agreement. They are clear that they want to negotiate a ‘‘friendly’’ EPA. They have given themselves two years, up to 2009, to do this. As a first step, they recognise that within the region, there is much work for them to do before they can agree on the contours of liberalisation with the EU.

The farmers’ movement in some of the West African countries has made its voice heard. Having suffered the detrimental impacts of the flood of food imports in the past decade, they want their region to have higher tariffs on agricultural imports than is currently the case.

Some countries in West Africa, such as Nigeria, already have fairly high tariffs. The work internally is to raise the existing tariff levels, harmonise these levels within the region, and then work out ways to negotiate the EPA with the EU on this basis.

According to Marc Maes, an EPA expert from the Brussels-based development organisation 11.11.11., the West Africans were angry that the EU had pushed Cote d’Ivoire and Ghana to the point where they had signed individual EPAs ahead of the rest of the region.

The region wanted to move ahead together and now that task has been made so much more difficult unless changes can be made to the interim agreements that have been signed by these two countries.

In Central Africa, countries have signed individual EPAs protecting various sensitive products. It will be challenging to harmonise the different schedules and convert the interim agreements into full EPAs at the regional level.

According to Maes, ‘‘the region is now in pieces. The pieces will have to be brought together. The countries need to find common ground and this will take time’’.

A European Commission (EC) official told IPS, ‘‘the interim agreements that were initialled at the end of last year with Pacific and African countries were a means to secure and even extend their market access to the EU, given the expiry of the WTO (World Trade Organisation) waiver.’’

The WTO waiver refers to an interim breathing period allowed by WTO states to the EU and ACP to bring their trade arrangement in line with WTO rules.

Maes spoke to IPS about the EC’s 2008 work plan, saying, ‘‘they are going to be pretty determined and aggressive. In each of the interim agreements, they have clauses for accession.

‘‘For example, in West Africa, where only Cote d’Ivoire and Ghana have initialled an interim agreement, they want the outstanding countries in that region to accede to this agreement. The interim agreements also have rendezvous clauses which are commitments to further negotiations that include the services and trade related issues.

‘‘They are going to push as hard as they can to make those countries that signed the interim agreements live up to these rendezvous clauses, and those that have not signed any agreement to do so.’’

According to Maes, some rendezvous clauses, however, are more aggressive than others. In the Southern African interim EPA, countries had agreed to the liberalisation of one service sector the moment the full EPA is signed and that they would open up other services sectors in the following three years. Other agreements are less specific.

Will negotiations in 2008 be as contentious and fraught with tension between the two sides as in 2007? According to Maes, the EU seems to be backtracking on its promises to the ACP once again, and there could possibly be a fight over this.

‘‘In Lisbon (at the EU-Africa Summit in December 2007), as a result of the public outcry by APC countries over the EPAs, Jose Barroso (the EC president) promised that he would meet all the ACP regions at high level this year and that the interim EPAs that had been signed in haste will be revised.

‘‘The ACP countries, in their resolution of December 13, 2007, welcomed the Barroso proposal. They want these interim agreements to be reviewed at these high level meetings, and for the contentious issues to be taken out.’’

But, said Maes, ‘‘now the Commission is backtracking. Peter Mandelson (EU trade commissioner) told the European parliament at the end of January that the Commission will not look backwards but forwards.

‘‘They see the high level meetings as opportunities to launch negotiations for the full EPAs and that, in the context of negotiating full EPAs, the interim agreements can be improved upon.’’

*The first in a two-part series

Excerpt:

By Aileen Kwa
GENEVA, Feb 26 2008 (IPS)

The European Union (EU) has an ambitious agenda for the economic partnership agreement (EPA) negotiations. It is pushing for the conclusion of full agreements in the next one to three years, covering everything from services to ‘‘trade-related’’ issues such as investment, competition and government procurement.

The latter include issues, also called ‘‘new generation’’ or ‘‘Singapore issues’’, which developing states successfully blocked in the World Trade Organisation (WTO) as they were regarded as detrimental to development. The issues first arose in the run-up to the WTO ministerial meeting in Singapore in 1996.

A European Commission (EC) official told IPS, ‘‘we want to finish negotiations on outstanding issues in 2008. The interim agreements so far include provisions on market access, development cooperation and revised rules of origin.

‘‘We want to continue negotiations on services, investment and trade-related rules. This is the work plan for this year. We will continue negotiations at regional level in order to bind all ACP (African, Caribbean and Pacific) countries into full EPAs.’’

According to the official, who spoke on condition of anonymity, ACP countries would be willing to enter into expanded EPA negotiations. ‘‘Transforming the interim agreements into full trade and development agreements means going beyond market access and including wider issues, such as trade-related rules.

‘‘We believe that market access alone is not sufficient to help their economies integrate into the global economy.

‘‘Preferential access granted under the Cotonou agreement has not contributed to increasing the world trade share of the ACP. Creating a more predictable business climate with transparent trade rules could make their markets more attractive for investors,’’ said the official.

Marc Maes, an EPA expert from the Brussels-based development organisation 11.11.11., has a different opinion regarding this expanded EPA agenda: ‘‘The trade-related issues which the EC seeks to negotiate belong to its most offensive interests.

‘‘These issues can seriously reduce the ACP countries’ policy space while it remains uncertain whether they really will attract many investors. Investors not only look at rules but also at infrastructure, the proximity of lucrative markets and the availability of skilled workers,’’ Maes pointed out.

The interim EPAs include trade in goods. The EU’s full EPA agenda also includes other trade rules. The liberalisation of services and the liberalisation of rules in investment and competition will guarantee the EU’s services companies access to the African markets.

The EU wants services to be liberalised across the entire spectrum: professional, business, telecommunications, distribution (retailing / wholesale services); environmental; financial; transport; energy; tourism and so forth.

These negotiations will entail African countries being expected to make commitments to remove any domestic regulation they have that could impede European companies in accessing these markets.

This could include removing any existing limitation on land ownership rights for foreign enterprises.

It also could include scrapping laws subjecting foreign corporate takeovers to government approval; laws that require foreign investors to form joint ventures with local companies should they enter the market; and laws limiting the scope of operation of foreign investors.

The liberalisation of investment rules could also mean getting governments that currently have ‘‘positive discrimination’’ regulations to scrap such rules if they are not deemed to be in the interest of foreign investors.

For example, some countries may mandate their banks to put aside a certain percentage of their loans for small farmers. Such rules may have to be cancelled.

The EC will also demand that foreign companies be given the same rights and privileges as local companies, includes government subsidies and support.

The new issues will also include the liberalisation of government procurement. All government projects and purchases will have to be opened to bidding by European companies.

In order to boost employment and strengthen local companies and industries, government contracts to build schools, hospitals and to set up information technology are often provided to local companies.

If the new government procurement rules are agreed upon, this will no longer be possible. European companies will have to be given equal access to all government projects and purchases.

There is uncertainty about how far the EC will able to push the ACP in the months ahead. According to Maes, ‘‘by the end of last year there was a lot of opposition. Relations between the EC and ACP negotiators have been soured. They are very frustrated by the pressure the EC exerted and what they saw as the mercantilist ambitions of the EC.’’

But there are two areas which the EU is likely to use to pull ACP countries back to the negotiating table in 2008. According to Maes, ‘‘under the EPAs, some rules of origin (market access rules dealing with the ‘nationality’ of products) have been improved upon compared to what countries had under the Cotonou agreement, for instance in fish and textiles.

‘‘However, on the whole these rules have not been improved upon. The EU could propose negotiations to make these rules less burdensome for the ACP countries.

‘‘The other area is development. The development chapters (where the EU is supposed to outline how they can support the ACP with aid) are incomplete and also have to be improved upon.’’

*The second in a two-part series.

Excerpt:

By Aileen Kwa
GENEVA, Feb 21 2008 (IPS)

The Ugandan parliament will soon have a hearing on the draft Plant Variety Protection Bill, approved by the cabinet early last year. If passed unmodified, the bill is likely to entrench the rights of breeders and companies while curtailing the rights of small farmers to exchange, save and breed new varieties using hybrid seeds.

There is an inherent conflict between small farmers’ and breeders’ rights. Breeders are often the companies that pay research institutions to propagate new hybrid seed varieties. Hybrid seeds are bred artificially to improve the characteristics of plants, such as yield, appearance and disease resistance.

Breeders are keen to sell their seeds on the market and to ensure that they have a monopoly in the market. It is important for them that any commercial use of their seed is disallowed by law hence their push for stringent intellectual property legislation.

According to an inside government source in Uganda who spoke on condition of anonymity, seeds companies including the likes of Monsanto have been lobbying the government for such intellectual property protection.

They are doing all they can to capture the local market. Government research institutions such as the National Agricultural Research Organisation (NARO), which used to produce traditional seeds for farmers, are now being paid by seed companies to produce their hybrid seeds.

According to various analysts, the first drafts of the Plant Variety Protection Bill were careful in trying to strike a balance between breeders’ and farmers’ rights. In fact, the draft was based on the former Organisation of African Unity’s Model Law adopted in 1998, which leans towards the protection of farmers’ rights.

This includes the right to save, exchange and breed these seeds on a non-commercial basis, age-old practices that small farmers all over the world have used.

However, there was a stalemate in the Ugandan cabinet when it considered the draft bill in February last year. At issue was where to draw the line between farmers’ and breeders’ rights.

According to one source, the conundrum was resolved by President Yoweri Museveni himself, who came to the cabinet meeting where the Plant Variety Protection Bill was discussed and condemned local communities for ‘‘sitting on resources without utilizing them’’.

He therefore felt they did not need to be consulted and instructed that the local community rights section in the bill be removed.

There have been concerted efforts from certain quarters to promote the use of hybrid seeds in Uganda. Early last year, a grant of 150 million dollars was provided to the country and its neighbours by the Rockefeller Foundation and the Bill and Melinda Gates Foundation to launch the Alliance for a Green Revolution in Africa (AGRA).

The money is to pay for more research into hybrid seeds, the provision of inorganic fertilizers, water management and extension services to facilitate the propagation of these seeds.

According to the government source, the US Agency for International Development’s project, known as the Uganda Agricultural Productivity Enhancement Program (APEP), has also been actively advocating the adoption of stronger intellectual property rules, including the use of biotechnology.

Tukundane Cuthbert is an extension worker, someone who helps farmers improve their productivity. He outlined the promises and pitfalls of hybrid seeds as follows: ‘‘The hybrid cabbage takes only three months and then you can harvest it.

‘‘Our traditional variety takes six months and there is no time for leaving the land fallow before you have to replant. With the hybrid cabbage, we can have more harvests per year.

‘‘But the seed can only be used once and that is all. We could use our traditional seeds over and over again. This means that at the end of the season (when we have used hybrid seeds), we have to buy new seeds. Those of us who are poor and can’t go to the market then cannot eat. Or we have to borrow and it is difficult to get collateral.

‘‘The hybrid seeds are high yielding, but we cannot afford to buy the technology and maintain it. I wish the government would empower the local researchers to own the technology,’’ Cuthbert said.

Another extension worker, John Kisembo, who works with Caritas in Uganda, was even more sceptical about the wonders of hybrid seeds. Caritas is a confederation of 162 Catholic relief, development and social service organisations.

According to Kisembo, ‘‘we are promoting indigenous seeds because there is a sustainability issue here. You can plant them over decades and they always germinate.

‘‘Our traditional varieties are also more resilient. The challenge we have is to improve the soil management practices farmers use. When there is good soil management, the traditional seeds do well. We also need research in organic agriculture and ways to control diseases.

‘‘The threat of hybrid seeds is not only that it is inorganic, but those promoting it are also advocating the use of other (chemical) inputs. This is a form of agriculture that is very expensive for our farmers,’’ Kisembo said.

If the bill is passed by the parliament, the protection of breeders’ rights is likely to further increase the availability of hybrid seeds on the market. As this happens over time, certain forms of traditional seeds will become scarce, threatening the biodiversity of the country and the region as well as the financial viability of farming for the rural poor.

*The first in a two-part series of articles

Excerpt:

By Aileen Kwa
GENEVA, Feb 21 2008 (IPS)

Uganda’s major trade partners are not only looking for food markets but also for seed markets. This has happened in a push that has been packaged as ‘‘the new green revolution’’ by corporations involved in biotechnology and chemicals. They have been supported by philanthropic organizations, notably the Rockefeller Foundation and the Bill and Melinda Gates Foundation.

Another such organisation is the Yara Foundation which was established in 2005 by Yara International, the world’s leading supplier of mineral fertilizers. This Norwegian company is the only international fertilizer producer which has had a significant presence in Africa over the past 25 years.

The United States Agency for International Development (USAID) also promotes hybrid seeds through its myriad projects in African countries, particularly funding to governments’ agricultural research institutions. It influences their direction and agenda, as is happening in Uganda. Other donors are also involved, such as the German government.

Last but perhaps of most critical importance is the World Bank. It has played a pivotal role in promoting its liberalization agenda since the 1980s. This had led to the opening up of African countries to agricultural inputs.

Under its influence the seed market across Africa has been privatised, preparing the ground for the entry of private companies. The presence of seed corporations is felt but is hidden.

Researcher Elenita Dano writes in her publication ‘‘Unmasking the New Green Revolution in Africa: Motives, Players and Dynamics’’ that ‘‘agricultural chemical and biotechnology corporations have notably downplayed their role in the push for a New Green Revolution…

‘‘(They) appear to remain on the sidelines, even as they quietly push their agenda forward through a myriad of partnerships with public research institutions, non-government organizations and farmers’ organizations…’’

Dano says that, having learnt from their experience in Asia, these corporations have allowed ‘‘public research institutions to be at the forefront in Africa, along with their philanthropic backers.

‘‘Corporations have also managed to subtly plant their most sophisticated operators in philanthropy as well as in the international agricultural research centres in an effective way so as to directly influence decision-making and research priorities,’’ according to Dano.

Furthermore, the American Seed Trade Association (ASTA) set up the African Seed Trade Association (AFSTA) as a local lobby group for the transnational seed industry.

AFSTA’s mandate is to ‘‘promote regional integration and harmonization of seed policies and regulations supportive of U.S. seed trade’’, with an explicit target of securing a five percent increase in US seed exports to the region within its first five years’’, according to a publication of the Association for International Agriculture and Rural Development. As mentioned, Uganda is one of the targeted countries. Its seed market is relatively small compared to other African countries (annual domestic sales of 6 million dollars in 2005 compared to South Africa’s 217 million dollars and Kenya’s 50 million dollars).

It sits next door to the much bigger Kenyan market and at the centre of the East African Community’s market. Seed exports are already flowing from Kenya to Uganda.

Before the structural adjustment reforms of the 1990s, the government essentially oversaw and subsidized the production of new seed varieties and their distribution to farmers. The National Agricultural Research Organisation (NARO) produced the new varieties and released them to the Uganda Seed Project for processing and multiplication.

The Uganda Seed Project also had the responsibility for marketing and distribution to farmers. All of this changed through the 1990s as a result of structural adjustment policies, the belief in liberalized markets and the lobbying efforts of both the US government and US philanthropic organisations.

The Uganda Seed Project and the formal seed market have become privatized. There are now about 10 private seed companies operating in the country.

Donor governments, philanthropic organizations, the World Bank and Ugandan politicians and bureaucrats have all had a hand in providing the funds, changing the policy context and drafting new laws. They have shifted institutional priorities towards the privatisation of seeds and, in small but sure steps, towards embracing biotechnology.

USAID supports a project in Uganda known as the ‘‘Uganda Agricultural Productivity Enhancement Programme’’ (APEP) which promotes the use of biotechnology. According to the APEP website, ‘‘USAID-Uganda provides support to enable the country fully utilize the potentials of biotechnology in the overall economic development strategy.’’

Its objectives are to support the development of a national biotechnology policy and implementation strategies, including research and design, technology transfer, biosafety and intellectual property rights; and to facilitate strategic collaboration and business partnership with public and private biotechnology organizations.

Early in 2007, an article in a Ugandan newspaper reported that the Rockefeller and Gates foundations had donated 150 million dollars to Uganda for the ‘‘Green Revolution’’ programme.

With the handing over of the donation in January 2007), Dr. Joseph De Vries of the Rockefeller Foundation announced that the ‘‘donation is aimed at causing a Green Revolution in Africa to fight starvation and famine’’. He directed an appeal at seed companies to utilize the funding once the programme was launched.

*The second in a two-part series of articles

Excerpt:

By Aileen Kwa
GENEVA, Jan 24 2008 (IPS)

Process issues have once again risen to the fore in the World Trade Organisation (WTO) as members brace themselves for the release of a new set of negotiating texts for agricultural and industrial tariff liberalisation at the end of this month or early February.

Delegates are concerned that WTO Director General Pascal Lamy might wrest the negotiation process out of the hands of the chairpersons of the negotiating groups when the texts become available, take control of the process and involve only a small group of delegations in the negotiations.

The corridor talk in Geneva is that Lamy might bring the new texts directly into a closed-door, selective ‘‘Green Room’’ negotiating process. ‘‘Green Room’’ refers to closed-door negotiations held among a limited number of delegations.

This would be a ‘‘horizontal process’’ where the negotiations of agricultural and industrial tariff liberalization are dealt with together so that exchanges can be made between these issues. Other issues, especially services, will also be brought on board quickly – if not at the same time.

A lunch meeting has apparently been scheduled to take place in Davos on the sidelines of the World Economic Forum on January 26. Invited is a select group of ministers. The issue of how to proceed after the revised texts have been released is expected to take centre stage at the meeting.

There seems to also be plans for a mini-ministerial meeting in the not-too-distant future. It was supposed to have taken place by February. But as a result of the slow progress, some are speculating that it may only materialize by the end of March or later, if it takes place at all.

As one major developing country delegate in Geneva put it, ‘‘progress is incremental. But we will need some more movement at some point (in order to conclude the negotiations), and this will have to come from the political level, not from here’’.

Commenting on the process, another developing country delegate said: ‘‘Lamy and, to some extent, the European Union, want to take the revised texts directly to the Green Room. This is going to be dangerous. We think that the texts need to come back to the membership for discussion and if necessary, to have a second revision.

‘‘If you listen to the majority, this was made clear at the final General Council meeting in December and at the recent open-ended agriculture meeting. Delegations were asking for the revised texts to be discussed in their specific committees. Lamy, however, wants to move to the horizontal process immediately,’’ said the delegate.

Another representative added, ‘‘Lamy thinks that the technical people in Geneva have finished their discussions. He doesn’t want any more special sessions (negotiating sessions on single issues). We don’t think this should be the case.’’

Delegations that are not usually invited to the Green Room are worried that their voices may be completely marginalized if the negotiations are to take place only in the Green Room.

An African delegate commented, ‘‘it has been a tradition within the WTO to place great emphasis on a process that is not transparent enough and that is not inclusive. This is what happens when they try to make a selection of a few delegations, numbering 30-plus, to decide on key issues.

‘‘They seem to be in discussion on improving texts but in fact the rest of the membership is then used as a rubber stamp. We have complained for years about lack of transparency, about exclusion, about divide and rule and about declarations from chairpersons (which do not reflect fairly the views of the membership),’’ the delegate told IPS.

‘‘A lot of members have raised their voices. If we have a perverted process when the texts are released, the entire multilateral trading system could be endangered.’’

Despite what some regard as progress on certain issues, there are still huge divergences. The membership is no nearer on deciding how much the U.S.’s trade distorting agricultural subsidies are to be cut.

There is still no agreement on the treatment of certain ‘‘special products’’ in agriculture for developing countries – whether and to what extent some of these should be excluded from tariff cuts. There is also disagreement on the ‘‘green box’’: billions of dollars of subsidies provided by the U.S. and the EU which they pass off as ‘‘non-trade distorting’’ and therefore ‘‘WTO-legal’’.

In recent months there has also been no movement on the level of tariff cuts to be undertaken for industrial products (the non-agricultural market access or NAMA talks). As a delegate said, ‘‘we are totally stuck in NAMA’’. Several delegations interviewed said that there does not seem to be any intention to change the very deep cuts reflected in the last negotiating text of July last year.

Some of the critical issues for the smaller developing countries, including the African members, seem to have been left by the wayside. For example, cotton, commodities and preference erosion. The latter refers to the removal of trade barriers reducing the price advantages of existing trade preference schemes that poor countries benefit from.

The ‘‘biggest question mark’’ for most negotiators at this point, however, is what Washington will decide. An insider summed it up as, ‘‘they do not seem to be pushing for anything’’. If the harsh NAMA demands of the EU and U.S. are maintained, the inside source said, the U.S. will have to go deeper with its subsidy cuts. ‘‘The two issues are related.’’

A delegate from a major developing economy said that he was ‘‘not very hopeful’’ that the talks could come to a conclusion. ‘‘However, we still have to keep at the negotiations,’’ he said. ‘‘Even if we have a break in negotiations (until after the U.S. elections), you have to be very careful about what is on the table and what is at stake.

‘‘If texts produced now are used as the basis of negotiations later on, they would trump everything else, including the Doha mandate. So we continue to be very vigilant because we might otherwise be laying down the imbalances of the future,’’ the delegate said.

He highlighted his concern regarding what he saw as an increasingly inward-looking U.S.: ‘‘I am not clear that they are ready to make ‘effective’ cuts in their overall trade-distorting subsidies (in agriculture). My definition is that ‘effective’ should be well below applied rates.

‘‘Their policies seem to be increasingly inward-looking, even when they are talking about bilateral or multilateral negotiations. They put their national interests first. Whilst there is nothing wrong with that, we have a commitment (in the Doha Round) to transform the trading system so that less developed countries can do better in their production and trade.

‘‘That would require deliberate policies, including special and differential treatment. But there is a tendency now to treat us at the same level, as if we have the same muscles. This is a big problem.’’

Excerpt:

By Aileen Kwa
GENEVA, Jan 21 2008 (IPS)

African negotiators are concerned that their development concerns have been sidelined in the much vaunted Doha Development Round of negotiations at the World Trade Organisation (WTO). Whether the round, which has missed previous deadlines, will be concluded this year or not depends on several issues.

All of these are about the power tussle between rich and poor countries over countries’ prerogative to use national policies to safeguard development.

On the process of the negotiations, African delegations are fearful that they might be completely marginalized from what could possibly be the closing phase of negotiations this year.

Referring to the WTO General Council session on December 18, an African negotiator remarked, ‘‘in every other developing country statement, the message to (WTO Director General) Pascal Lamy was that he should not take the revised texts from the chairpersons (of the negotiations) straight to the Green Room.’’ The Green Room refers to closed door negotiations held among a limited number of delegations.

There are also concerns regarding the issue of rural livelihoods. Import surges, as a result of liberalization, have wrecked havoc and destroyed thousands of farm jobs across the developing world. G33 countries have specifically asked for a mechanism, the special safeguard mechanism (SSM), which would allow developing country members to raise their tariffs in response to these surges.

The G33 is a group of developing countries organised around the issue of rural livelihoods and food security.

One G33 negotiator told IPS, ‘‘we are completely stuck on the SSM. There is no agreement on a whole range of issues’’.

On product coverage, proponents want all agricultural products to be covered by the mechanism, but exporting members want to limit the SSM to a much smaller number of products. On how the SSM can be triggered, proponents have been told that a much higher import volume is needed before they can avail of the SSM.

On the remedy, G33 members want to be able to go beyond the Uruguay Round bound tariff rate, but are also facing opposition there. This rate refers to the maximum tariff rate that countries can charge on imports, rates which they legally bound themselves to in the Uruguay Round of negotiations which were concluded in 1994.

The G33 negotiator added, ‘‘the chairperson (of the agriculture negotiations) also wants us to check whether or not consumers are benefiting from lower prices. If they are, the SSM should not be triggered. He also wants to limit the number of times the SSM can be invoked.’’

‘‘There are layers and layers of restrictions being introduced in the SSM negotiations. At the end of the day, the mechanism will not be effective. These discussions are going the wrong way,’’ is his conclusion.

Regarding the NAMA negotiations, South Africa’s representative Faizel Ismail made a statement on behalf of the NAMA 11 at the last meeting of the General Council last year. The statement was aimed at averting another draft text that disregards their position. The NAMA 11 is a coalition of 10 developing countries.

He told the WTO membership on December 18 that ‘‘the NAMA chair’s July text excluded the views of NAMA 11 completely. The revised text must redress this and expand the range of coefficients to include our position.

‘‘Excluding our views again will prejudice the negotiating position of NAMA 11 developing countries and skew the negotiations … in favour of developed countries once again. This will not result in a fair process, nor facilitate balanced outcomes in the negotiations.’’

Coefficients refer to the numbers to be negotiated for insertion into the tariff cutting formula. The higher the coefficient, the smaller the tariff cut a country has to make.

Yet another area of deep contention is in services liberalization. Here the demandeurs are mainly the U.S. and the EU, as well as India. Both the U.S. and the EU want to speed up the liberalization of services trade through ‘‘benchmarking’’ – adoption of a formula that would obligate members to liberalise a certain portion of their services trade.

The Africa Group and the ACP (African, Caribbean and Pacific) countries are completely opposed to this.

Even in the trade facilitation negotiations, a West African negotiator remarked, ‘‘we are not seeing the developed countries deliver on the commitments they undertook to provide technical assistance and capacity building to enable developing countries to implement obligations in trade facilitation’’.

Excerpt:

By Aileen Kwa
GENEVA, Jan 21 2008 (IPS)

A busy negotiating schedule is lined up for this year at the World Trade Organisation (WTO). The question remains whether negotiators will have to continue passing the time as the powers-that-be in Washington are consumed by pre-election politics, or if the technical solutions which they have been working on could, in fact, lead to a conclusion of the Doha Development Round.

The chairs of the negotiations on agricultural and industrial products are expected to release another round of draft texts at the end of January. This will be followed by intense text-based negotiations.

If things go according to WTO Director General Pascal Lamy’s Plan A, modalities (new rules and commitments) for agriculture and non-agricultural market access (NAMA) are to be concluded by March or April.

There could even be what an African delegate termed a ‘‘medium-sized’’ ministerial meeting to endorse the modalities at this time, with a fully fledged ministerial meeting at the end of 2008 to conclude the Round.

There are varying opinions as to the likelihood of Plan A materializing. As 2007 slipped away and the U.S. entered both a recession and an even fiercer stage of partisan pre-election frenzy, it seems unlikely that Washington is in any mood to liberalise trade.

Lori Wallach of Public Citizen, based in Washington, told IPS that ‘‘there is no appetite for a Doha Round here. The only Doha deal that could possibly break this mood would have to be something so lopsidedly pro-U.S. big corporations that it would not be a feasible outcome.

‘‘That is, if there was some sudden windfall pile of trade goodies to harvest without the U.S. having to give much, then that would get things moving here. We’re heading into a recession and trade is increasingly politically toxic, given our 800 billion dollar trade deficit and its effect in slowing our growth by two percentage points’’, she added.

Referring to the increasingly unpopular North American Free Trade Agreement (NAFTA) between the U.S., Canada and Mexico, Wallach observed, ‘‘the Democratic presidential candidates are all trying to ‘out anti-NAFTA’ each other. Remarkably, even half of the Republican presidential candidates are anti-NAFTA and anti-WTO.’’

Then there is the issue of the Trade Promotion Authority (TPA), the authority granted by the U.S. Congress to the U.S. president to negotiate trade agreements that Congress could approve or reject but not amend. President George W. Bush’s administration requires the TPA to conclude the Round.

According to Wallach, ‘‘Bush has a 5 percent chance of getting a Doha-only TPA. If there had been a broader window of opportunity, that was shut down at the end of last year when Bush vetoed or threatened to veto every single Democratic priority initiative passed by Congress.’’

According to a WTO negotiator from West Africa, ‘‘I have not seen any sign or commitment that 2008 is a definitive date. It is an aspiration, but I won’t be surprised if it will go to 2009. And if it does, the election in the U.S. would be over and they would be able to test the waters.’’

He said that within the Group of 33 (or G33, a coalition of developing countries which has been calling for the protection of food security and rural livelihoods), ‘‘we have criticized ourselves for being too flexible, and the flexibility should not be one-sided. We are waiting for reciprocity from the developed countries.

‘‘At the end of the day, we will have a blame game. Developed countries will ask for more liberalisation in NAMA and services and they will blame developing countries for not showing signs of flexibility. Developing countries will say that our interests have not been taken seriously,’ he added.

From his point of view, the U.S. and the EU are now very obviously working closely together, and ‘‘just from seeing that, I think that there will be no movement on their side.’’

However, not all negotiators share his prognosis for 2008. An East African negotiator underscored that ground has been covered on some technical issues. ‘‘The possibility of a conclusion looks positive, not completely, but more positive than before.’’

Excerpt:

By Aileen Kwa
CAPE TOWN, Dec 15 2007 (IPS)

‘‘We succumbed,’’ lamented a diplomat from Namibia. ‘‘We signed on the 12th of December. The pressure was too much. The private sector felt that they would be disproportionately affected. In terms of markets, they would be losing access for beef, grapes, fish and fish products.’’

‘‘The political and economic strength of the European Commission (EC) is in itself a threat and a pressure in the negotiations,’’ he explained on condition of anonymity to IPS.

‘‘When negotiating with a stronger partner, you end up only being on the receiving end. Bully tactics are used with the threat ‘you either sign or you don’t have the market’,’’ he said.

Up to the last moment, Namibia’s government had tried to resist the pressures from both their own private sector and the EU. Until late last week, trade minister Immanuel Ngatjizeko had categorically stated that the demands the EPA placed on Namibia were ‘‘not acceptable’’.

He insisted that the EPA should be helping with ‘‘regional integration and not to disintegrate’’ the region.

‘‘We made a lot of mistakes,’’ the diplomat told IPS. ‘‘There was no proper coordination amongst the African, Caribbean and Pacific (ACP) countries. The EC has successfully fragmented the ACP, not only in terms of regions, but also within regions.’’

The Southern African Development Community (SADC) consists of 15 countries. ‘‘While we used to get EU development aid for the region as a whole, now only seven SADC countries (those party to the SADC EPA) will get development aid that is related to the EPAs. This will have ramifications.’’

The intra-SADC free trade area is also supposed to be formalized by 2008. How this will play out, with some countries being signatories to the EPAs while a country such as Angola chose not to sign the EPA, remains to be seen.

The Namibian diplomat was quick to add that whilst the country had signed the interim EPA on December 12, it had done so with explicit reservations on certain clauses. ‘‘If these concerns are not satisfactorily addressed in the next phase of negotiations, then we can say that we are not in a position to ratify the final agreement and opt out. But in the meantime, we need to do other things, such as finding alternative markets.’’

The problem is that Namibia, Lesotho, Botswana, Swaziland and South Africa have a common customs union – the Southern African Customs Union (SACU), established in 1910. Lesotho, Botswana and Swaziland have signed the SADC EPA which contains clauses that Namibia is not comfortable with.

One of these clauses restricts local content requirements in the manufacturing sector. In order to support local industries, Namibia does not want to abolish any legislation that requires investors to use locally produced inputs. Another clause deals with the freezing of export taxes. The EC does not want ACP countries to put in place export taxes. Namibia, however, wants the freedom to use export taxes to discourage the export of raw materials and to encourage local industries to add value to their products before export.

The EC has asked SADC countries to provide it with the same level of market access SADC gives to other significant trade partners. SADC is currently negotiating free trade agreements with India and with the MERCOSUR. MERCOSUR is the Southern Common Market trade area which includes Brazil, Paraguay, Argentina and Uruguay.

If more favourable terms of market access are provided in these and other future trade agreements, the same level of liberalization will have to be extended to the European Union (EU).

The SADC EPA also states that goods entering any one of the SADC EPA signatories should be allowed to move freely to the other signatory countries. However, SADC has yet to formalize its own regional customs union. There are still issues to be sorted out internally.

In contrast to countries which have caved in and signed the interim EPAs, Senegal in West Africa remains steadfastly opposed to the EPAs. An expert from Senegal, who declined to be named, commented on President Abdoulaye Wade’s firm stance taken at the Africa-EU Summit in Lisbon earlier this week.

‘‘He was simply reflecting the national position. The private sector, civil society, parliament and the opposition are all opposed to the EPAs. To have an EPA right now will create a lot of problems for our economy. It will open our markets to products from the EU, some of which are subsidized,’’ said the Senegalese trade expert.

‘‘Senegal is a least developed country. The industry and agricultural sectors are not ready to compete with the EU on a level playing field. In the next phase of EPA negotiations, we would also have to bring in investment, competition and government procurement, issues which have been rejected at the WTO (World Trade Organisation).

‘‘So the EPAs are WTO-plus. On the other side, in development cooperation, we are not sure that what is on the table can offset any negative liberalization impact,’’ said the expert.

He also underscored the problems the EPA poses for the West African region, in particular the West African Economic and Monetary Union (WAMU / UMOA). The monetary union consists of eight members – Senegal, Benin, Burkina Faso, Cote d’Ivoire, Mali, Niger, Togo and Guinea-Bissau.

Of these, Cote d’Ivoire is the only country which has signed the interim EPA in an attempt to safeguard its banana exports to the EU. The country is the main economic powerhouse within WAMU, accounting for 40 percent of the union’s gross domestic product.

According to the Senegalese expert, ‘‘Cote d’Ivoire’s signing of the interim EPA will definitely have an impact on WAMU.’’ Given the high level of economic integration in that region, EU products flowing into Cote d’Ivoire can easily find their way into the other WAMU countries.

‘‘I don’t think they (the EU) did an impact assessment on regional integration,’’ he said.

He also underscored the tensions the EPA negotiations have created for the WTO negotiations. ‘‘They have put the LDCs (least developed countries) in a very bad position in the WTO. Since the 2005 Hong Kong ministerial meeting, LDCs have asked for duty-free and quota-free market access to all developed countries.

‘‘Under the EPA, the duty-free and quota-free market access is reciprocal. Now other countries will say, ‘You have given this to the EU, now you will also have to give me something in return’,’’ he said.

‘‘So there are many unanswered questions and a lot of uncertainty,’’ he concluded.

Kenya has also signed an EPA, together with others from the East African Community. A trade diplomat from Nairobi, alluding to the threats the EPAs pose for Africa, summed the position up in the following way: ‘‘They say love is blind. This must be real love because we are going along without knowing where we are going.’’

Kenyan civil society groups are working hard to make the EPAs a major issue in Kenya’s national elections taking place later this month.

According to Ezekiel Mpapale of the Initiatives for Community and Enterprise Development, ‘‘One of the things we are doing is to make sure that Dr Mukhisa Kituyi (the current trade and industry minister) is not re-elected. We think he has betrayed us Kenyans.’’

Excerpt:

By Aileen Kwa
KAMPALA, Nov 20 2007 (IPS)

The news that the ministers of the East African Community (Kenya, Uganda, Tanzania, Rwanda and Burundi) are on the verge of signing an economic partnership agreement with the European Union (EU) has been received with mixed reactions by government officials from these very same countries.

The East African Community (EAC) ministers had agreed with their EU counterparts last week that they would sign a framework agreement on trade in goods, market access, development cooperation and fisheries by no later than November 23 this year.

This framework agreement will reduce to zero 81 percent of current EU exports in industrial and agricultural products entering the EAC markets. The elimination of tariffs to zero will take place over a transition period of 25 years.

By the end of the tenth year, there will be a zero percent tariff on raw and capital goods. Tariffs on intermediate goods will be brought down to zero between the eleventh and twentieth year and tariffs on finished items will be brought to zero percent after 25 years.

Built into the agreement will also be a mechanism for the continuation of the economic partnership agreement (EPA) negotiations beyond December 31, 2007. The additional areas to be negotiated include liberalisation of services, intellectual property and the ‘‘new generation issues’’ of investment, competition policy and government procurement.

A negotiator from the region who had been involved in the negotiations felt that the outcome is good for the EAC. ‘‘Of course it is good. If it wasn’t good for us, we won’t have agreed to it.’’ He was pleased about the level of liberalisation, coupled with the exclusion list (19 percent of current trade), and the transition period. Tariff reductions will only commence from 2010.

Other government officials from the region, however, expressed unease. A major issue between the negotiating partners had been over ‘‘development’’. The EAC had presented the EU with a matrix of projects they wanted the richer nations to fund.

According to an inside source from Nairobi, Kenya, who spoke on condition of anonymity, ‘‘what is not clear is what we are getting in the ‘development’ framework. I don’t know how concrete or binding this development framework is. It is a total mess, but unfortunately we are already there.

‘‘Are we getting additional funds? The EU is saying they will be using the current EDF (European Development Fund). We have been conned into this thing. Here we are, opening our markets to the EU, and in return we are getting a ‘best endeavour’ (non-binding) development framework,’’ he told IPS.

‘‘We don’t know, in concrete terms, where the funds are coming from – if there are no additional funds. So this interim arrangement is just about opening up our markets for EU,’’ he said.

Another government official from Kampala, Uganda, raised similar concerns: ‘‘I think there is an EAC development plan. Most probably that is what has been picked up for support under ‘development’.

‘‘In terms of funds, are we getting anything over and above what we would have got (without the EPA) or are we getting the same? Those answers are not very clear and nobody can tell you. We know that the EDF is coming. Maybe it will still be the same amount of money.

‘‘But we are told that the EU has been the major funder of our roads, so we need to agree with them (on the EPA). So it is a bit tricky,’’ the Ugandan official said, on condition of anonymity.

When asked how the package might affect the agricultural sector in Uganda, there was some uncertainty. The Ugandan official commented, ‘‘there is a list of sensitive products which has been excluded from liberalisation. I am told that the (EU agricultural) subsidies are not open for negotiation.

‘‘This means that, tentatively, (the EAC will not open its markets) to those products that the EU is subsidising, such as beef and dairy. But when you look at Rwanda, they are importing a lot of milk from the EU. How are Uganda and Tanzania going to keep the milk out? If there are no border measures, the milk can easily come here.’’

To the question whether the EPA will affect the industrial sector in Uganda, he commented: ‘‘We don’t have much of an industry to talk about, really. Maybe the problem is upcoming industries, I don’t know.

‘‘It could be a catch-22. Maybe we can attract investment or maybe it will discourage our local entrepreneurs who have already started something or who could have started something’’, were it not for external competition.

He gave the example of small grocery stores that are currently being pushed out of the market. ‘‘They are being swallowed by supermarkets. These small shops were supplying extra services. You could get a few things and pay later, and they were in the suburbs. Now, with the coming of supermarkets, some are pushed out.

‘‘They are no longer competitive. We are not sure whether those (EU) people will come in (as a result of the EPA) and displace the small people.’’

He also raised the issue of neighbours benefiting at the expense of Ugandans. ‘‘What if Europeans decide to put up industries in Kenya and don’t come here?

‘‘Unilever is in Kenya and they are bringing all the products here – soap, toothpaste – to our supermarkets. So the people benefiting are Kenyans and there is no guarantee that we will benefit, although we are talking as EAC.’

‘‘When you look at the Kenyan private sector, their export volume is quite high. But when you look at ours, the volume is a bit low. Ours could go under the EBA (the EU’s Everything-But-Arms trade initiative). I don’t know if our private sector is aware of this. If they are not, they might be told that by January, their products will attract a higher tariff.’’

As a least developed country (LDC), Uganda can avail itself of the EBA preferential arrangement of the EU which provides zero duties on all LDC exports.

The Kenyan official had this to add: ‘‘We are better off with the generalised system of preferences (the tariff rates which the EU offers to all countries). The duties are high but they would not have stopped us from exporting and we would not have had to open our markets for the EU.

‘‘But now the EU is telling us to pay a price for the preferences we are receiving from them by opening our markets. Even when we do this, the countries we fear will still be more competitive – India, Korea and others. The EU is already entering into free trade agreements with them. So there is nothing we are gaining by opening up.

‘‘But the political aspect comes into play. The politicians say we need to reassure some of the key players, particularly in horticulture, that trade will not be disrupted (at the end of the year). Just because of horticulture, we are opening up our markets.’’

Excerpt:

By Aileen Kwa
NAIROBI, Nov 15 2007 (IPS)

‘‘Dairy farmers in Kenya are doing well now,’’ says Peter Wanyeki, as he flashes a big smile. ‘‘Before, when we went home to the village, you could never take enough money with you. Everybody was poor. But now the situation is different. The dairy farmers are rich because they are getting a very good price for their milk.’’

Peter now works in Nairobi, but he grew up on a dairy farm. ‘‘I want to go back to farming in five years. I think I can have 30 to 50 cows, get together with some other farmers and set up a processing centre. If we do that, we will do fine,’’ he says, clearly upbeat about the prospects for the industry.

The picture for dairy farmers is not uniformly attractive though. There are farmers in certain regions, such as those along the coast, who feel they have been marginalised by the government.

Nevertheless, on balance, with government support for the revitalisation of the dairy marketing board called the Kenyan Cooperative Creameries (KCC) in 2003, the sector has performed much better.

The question is, will Kenya’s dairy farmers survive if Kenya and the other countries in the east African region enter into an economic partnership agreement (EPA) with the European Union (EU)? The deadline for the talks is December 31 and even at this late stage, negotiations remain heavily bogged down by differences.

The EU envisions the EPA to be a reciprocal trade agreement. It plans to open 100 percent of its market duty free and quota free to its former colonies, including Kenya. In return, the EU is insisting that Kenya and its neighbours open 90 percent of their markets.

What will happen to the dairy industry? Will this lead to another deluge of EU milk powder into Kenya?

As a result of the World Bank’s structural adjustment programmes, the dairy sector was liberalised in 1992. Tariffs were lowered to 25 percent and the KCC, which had bought milk from farmers at set prices, was abolished. Private traders were allowed to operate in the sector.

Disaster struck as milk powder flooded the Kenyan market. The milk came from a variety of sources, including New Zealand, South Africa and Zimbabwe, but the EU was the predominant exporter.

Powdered milk imports rose from 48 tonnes in 1990 to 2,500 tonnes by the end of the decade. In fresh milk equivalent, this presented an increase from 400,000 litres to 21 million litres.

The local industry collapsed. Prices dropped way below production costs. Domestic production fell by nearly 70 percent, reaching a meagre 126,000 tonnes in 1998. Small dairy farmers – numbering some 600,000 people – were plunged into poverty.

In 2001, the government increased the tariff from 25 to 35 percent. However, even this was insufficient to stem another episode of import surge in 2001. Following much public debate, tariffs were raised to 60 percent in March 2002.

The revival of the KCC in 2003 was a major boon. Since then, locally produced and processed dairy products have increased substantially and have regained their majority share in the domestic market.

What will happen to the dairy sector if Kenya liberalises as per the EPA? This question is especially pertinent given that, despite the claims of ‘‘free market’’ competition, the EU subsidises its dairy sector to the tune of 2.5 billion euros a year.

Kenya is by no means the only country that has been badly affected by the export of artificially cheap European milk powder. In Jamaica, imported European milk powder devastated the sector. In the Dominican Republic, the fifth most important market for the EU, 10,000 farmers have been forced out of the sector in the last two decades.

In Sri Lanka, the seven-fold increase in milk imports from the late 1990s has consigned the local milk sector to permanent sluggishness. From Bangladesh to Nigeria and the Ivory Coast, artificially cheap European milk squeezes small producers out of their local market.

The last reform of the EU’s Common Agricultural Policy (CAP) in 2003 did little to correct the distortions in the dairy sector. The reform meant that export refunds in the milk sector are being scrapped and domestic prices are being brought in line with world prices.

However, EU farmers are now compensated through direct payments which have been labelled a new form of hidden export subsidisation.

It is projected that in France, the CAP reform is likely to push small French farmers out. Nevertheless, their production quotas will be taken over by the big producers and the quantity produced for 2007 is expected to be even higher than in 2003.

Kenya and its regional partners have asked the EU to reduce its domestic and export supports to agriculture in the context of the EPA negotiations. The EU has flatly refused to even discuss the issue, arguing that domestic supports are an ‘‘internal’’ issue.

This is untenable, given that the African market is being targeted as a major market for Europe’s subsidised milk products.

Between 1996 and 2003, even as EU dairy exports to the world market decreased by 0.44 percent, dairy exports to African, Caribbean and Pacific (ACP) countries grew by 32.8 percent. The ACP market accounts for about 14 percent of total EU dairy exports, and Africa absorbs the largest share.

If Kenya eliminates tariffs on milk in the EPA negotiations, Kenyan milk farmers will be plunged into their nightmare of the 1990s. Kenya may choose to protect milk tariffs in the EPA negotiations by classifying milk powder under the sensitive products list.

However, the EU is pushing Kenya and its partners to limit the sensitive product list for the region to a meagre 10 percent of all goods currently imported into their countries from Europe. If milk is protected, another sector in industry or agriculture will be sacrificed. Which one will it be?

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By Aileen Kwa
NAIROBI, Nov 8 2007 (IPS)

On the eve of the deadline of the finalisation of the economic partnership agreement (EPA) negotiations, chaos reigns.

Ministers of the East and Southern African (ESA) grouping are gathering in Brussels, Belgium, next week for negotiations with the European Union (EU). It remains to be seen whether talks will stall and be carried over to next year, or if an ‘‘EPA-lite’’ will be accepted.

An ‘‘EPA-lite’’ refers to an interim agreement covering the two components of , on the one hand, market access in goods and, on the other, development.

There is chaos at two levels. Firstly, the 16 country ESA grouping is, at this late stage, splitting into two parts, throwing talks into confusion. The East African Community consisting of Kenya, Tanzania, Uganda, Burundi and Rwanda have a common customs union and have decided to sign their own EPA with the EU.

Indian Ocean states (Mauritius, Seychelles, Madagascar and Comoros) have also decided to negotiate a separate EPA. These countries have spent the last two years negotiating with the EU from a joint ESA text. It is unclear how new texts will be stitched together within the short time available before the end-of-year deadline.

The shifting configuration of country groupings for the negotiations, however, is not even the main problem. There are still major differences between the EU and ESA countries on very basic issues.

First and foremost, there has been no meeting of minds about what constitutes ‘‘development’’. Both the EU and African countries have agreed that ‘‘development’’ sits at the heart of the EPA negotiations. Yet both sides are worlds apart translating what this means in practical terms.

The ESA countries, defining development as the strengthening of their industrial and agricultural production base, have pushed hard for the EU to commit to a list of development projects, with financial commitments attached.

The EU has not been enthusiastic and has apparently tried to sidestep such conditions. The EU has been successful in persuading the ESA grouping to downgrade their demands.

The implementation portion of the ‘‘development chapter’’ in the EPA text has been converted into a ‘‘development matrix’’. Now that the matrix has been worked out by ESA, both sides are quarrelling over where to put it.

ESA wants it appended to the EPA text to ensure that it is legally binding on the EU. The EU has declined, indicating that they will only make a reference to it in the text. Now, the EU is backtracking even further. It is unclear if such a reference will even be made in the ‘‘development matrix’’.

In any case, the EU side has vehemently insisted that they cannot provide financial assistance in the EPA.

According to Jane Nalunga of the non-governmental Southern and Eastern African Trade Information and Negotiations Institute (SEATINI), ‘‘When we came up with the negotiating draft, we put in a chapter on development. The EU said no, let us remove it.

‘‘They didn’t say right from the beginning, ‘We won’t consider it’. They said, ‘Remove it and put it in a development matrix. We will make a reference to it in the text.’ Now that we have done that, they say, ‘This is a Christmas shopping list.’ They don’t even want a reference to be made to the matrix in the text.’’

Nathan Irumba, SEATINI executive director, argues that ‘‘the whole problem is that EU has lured countries into EPAs by promising them that there would be development programmes. That is a lie from the beginning – there will be no development programmes. There is only the EDF (European Development Fund) – and there is no new money there.’’

The ESA countries are still angling for a firm commitment from the EU to provide development funding. As one Kenyan trade ministry official noted, ‘‘We need support to improve our competitiveness so that we will be able to withstand the liberalisation commitments’’.

Disagreement over the much-vaunted (by the EU) ‘‘development’’ dimension of the EPAs could bring the talks to a grinding halt in the coming days.

There is also no agreement on the scope of products that can be exempted from tariff elimination. The ESA countries had initially asked for 57 percent of their tariff lines to be protected. The European Commission (EC) refused to accept the list and have asked ESA to shorten it.

Now the EC is insisting that the exception list should be limited to only 10 percent, while the ESA countries are aiming for 30 percent. According to Nalunga, ‘‘In Kenya, with all its tribal sensitivities – different regions and tribes wanting to protect different crops – it will be politically sensitive limiting the protection to only 10 percent.’’

A previous assessment by the United Nations Economic Commission for Africa showed that unless the ESA countries protect up to 40 percent of their trade with the EU, it is likely that their industries will be negatively impacted.

In addition, there is also no agreement on the very important issue of the timeframe for tariff elimination. All agricultural and industrial products which are not in the sensitive list will have their tariffs eliminated over time. The EU is insisting on a maximum of 12 years, whilst the ESA countries have asked for 25 years.

Domestic support and export subsidies in agriculture are another area of contention. ESA countries have expressed the fear that their agricultural producers will be displaced by unfair imports of subsidised EU agricultural goods. IPS has learnt that the Europeans have flatly refused to even discuss this. These issues, they say, are an internal affair.

The two sides have also struggled over the issues of review and benchmarking. Both sides agree that there should be an in-built mechanism for review in the EPA text. The ESA countries have identified certain development benchmarks.

They want their liberalisation commitments to be pegged to these benchmarks. If the development benchmarks have not yet been attained by the time of the review, they want to be able to go back on the liberalisation timetable.

The EU has been dismissive of this position, insisting that a mechanism for review should be aimed at expanding the scope of liberalisation and not allow backtracking on those commitments.

With such wide divergences on major issues, it is uncertain if the ESA and the EU will be able to sign on the dotted line by the end of the year.

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