Welcome to the Focus on the Global South’s Derailer’s (1) Guide to the WTO

From 13-18 December 2005, trade ministers and
delegations from the World Trade Organisation’s
(WTO) 148 country members will meet in Hong
Kong at the WTO’s sixth Ministerial Conference. (2)

As farmers, fishers, indigenous peoples,
workers, women, mass organizations, social
movements and activists from all over the world
have repeatedly pointed out, there is nothing
even remotely developmental about the
current Doha round of WTO negotiations.

On the contrary, the Doha negotiations are
heading in a direction that will lock the world’s
peoples in a trade regime that will have disastrous
impacts on food security and sovereignty, industry,
employment, the environment, livelihoods and
the access of millions of people to essential
services, technology and health-care.

Any trade deal that emerges from current
negotiations will serve to consolidate the control
of large national and multi-national corporations
on the world’s agricultural, industrial, technological
and infrastructural capacity.

Delegates from several developing countries
– especially Africa, the Caribbean and Pacific
regions, and Least Developed Countries (LDCs)
– also share these concerns. But they appear to
be both, unable and unwilling to stop the WTO
machinery in its tracks and to demand the time
and the ‘political space’ they require to fashion
trade policies that truly serve the developmental
needs of their respective populations.

It is now up to the world’s peoples - all of
us - to bring pressure on our national law and
policy makers and trade delegates to immediately
halt the substance and direction of current trade
negotiations and urgently re-think the so-called
“Doha Development Agenda.”

The Derailer’s Guide to the WTO
provides basic information about WTO agreements,
what is on the negotiating table for Hong
Kong and the remainder of the Doha Round
(which will likely continue through 2006), and the
main actors in these negotiations. It also offers
ideas about how all those committed to social and
economic justice can stalemate, or derail, this
latest liberalization offensive through the WTO
parading under the guise of “development.”

As in the Seattle Ministerial Conference in
1999 and the Cancun Ministerial Conference in
2003, no deal is better than a bad deal, and
a bad deal is the only possible outcome of the
direction in which the current negotiations are
heading.

Time is short and the issues are urgent and
many. If we want to protect our commons, and
our rights and capacities to shape development to
meet the priorities of our communities and
societies, it is imperative that we prevent a new
trade deal from being reached in the Hong Kong
Ministerial Conference and subsequent negotiations.

That is, we need to DERAIL THE WTO!
We hope that you will find this
DERAILER’S GUIDE TO THE WTO, which
accompanies the video ‘Why the WTO is
really bad for you’, useful in planning your
strategies, actions and mobilizations towards this
goal.

Focus on the Global South
www.focusweb.org

(1) To derail the WTO is an active strategy to shut down the WTO by preventing consensus in its negotiations.

(2) Ministerial Conferences are the WTO’s highest decision-making body and are empowered to take decisions on all matters under any of the agreements within the WTO regime. At the Hong Kong Ministerial Conference, delegates are
slated to agree on the elements of a new trade deal to enable negotiations in the four year old “Doha Development Round” to be concluded in 2006.

PS Both the guide and the video can be downloaded from our website.

 CONTENTS

1. The End of an Illusion

2. Ten reasons why this is not a development round

3. The Agreements exposed:
– Agreement on Agriculture (AoA)
– The General Agreement on Trade in Services (GATS)
– Non-Agricultural Market Access (NAMA)

4. With a little help from its friends: WTO, IMF and the World Bank

5. The Colombo Declaration

6. The G-Guide Groupings in the WTO Agriculture Negotiations

7. Glossary and Trade Jargon

Who is Focus on the Global South?

Focus on the Global South is a research, policy
analysis and activist organisation based in Asia
(Thailand, Philippines and India). Focus on the Global
South aims to support the struggles of social movements
and activists in the Global South by providing
research and analysis on the political economy of(
globalisation, especially on the key institutions of neoliberal
and corporate globalisation.

Focus on the Global South Contact Details

www.focusweb.org

Thailand: Focus on the Global South C/o CUSRI,
Chulalongkorn University, Bangkok, 10330 Thailand
Ph: + 66 2 218 7363-65; Fax: + 66 2 255 9976
E-mail: admin focusweb.org

India: Focus on the Global South: India Programme A-
201, Kailash Apartments, Juhu Church Road, Juhu,
Mumbai 400049
Tel: +91 2255821141, 5582, 1151; Fax:
+91 2226254347
Email: focusind vsnl.net

Philippines: Focus on the Global South Philippine
Programme 19 Maginhawa Street, Teachers Village,
Quezon City 1104 Philippines
Telefax: + 632 4330899
Email: admin_phils focusweb.org

All roads lead to Hong Kong

There are many ways to get involved in the actions,
events and mobilizations in the run up to and during
the 6^th WTO Ministerial in Hong Kong. In Hong Kong,
the group to get in touch with is the Hong Kong
People’s Alliance on the WTO.

The HKPA

The Hong Kong People’s Alliance on the WTO
(HKPA) was launched on 22 September 2004. HKPA
was formed into an alliance to make a powerful
representation of the people to the ministers at the
WTO meeting in December 2005 in Hong Kong. They
are a network of grass-root organizations, which
include trade unions, community labour groups, and
organisations that represent migrant workers, students,
women, church, human rights, research
organisations and regional organisations that are
based locally in Hong Kong.

There is a website for more information and details on all of this:
http://www.hkpa-wto.org/

You can also email the secretariat:
pawto2005 yahoo.com.hk

The Derailer’s Guide to the WTO: Section 1

 The End of an Illusion
WTO Reform, Global Civil Society and The Road to Hong Kong

SUMMARY

The “July Framework Agreement” is the last nail
in the coffin of the illusion that the WTO can somehow
be reformed, either piecemeal or comprehensively,
to serve the interests of developing countries. More
than ever, the Framework and its aftermath have
revealed the WTO to be an iron cage that traps
developing countries in a negotiations game that is
systematically skewed in favor of the big trading
powers of the North.

With even greater intransigence on the part of
the trading powers of the North today, as highlighted
by their paltry pre-Hong Kong offers in October and
November 2005, it is difficult to elaborate any other
strategy to protect the interests of the developing
countries and global civil society than the one that
was developed for Cancun-that is, derailment of the
WTO Ministerial.

Essentially, derailment involves zeroing in on the
key point of vulnerability of the WTO: its consensus
system of decision-making. Concretely, it means
working to prevent consensus from emerging in any of
the key negotiating areas prior to and during the Sixth
Ministerial in Hong Kong.

A strategy of derailment, to be successful, must,
in the months leading up to the Sixth Ministerial,
articulate lobbying and mass pressure in Geneva with
national mass campaigns directed at specific governments,
culminating in a coordinated program of mass
actions and lobby pressure in Hong Kong and
globally on D-day in the middle of December 2005
(13^th-18^th).

1. SEESAW STRUGGLE

The last few years have seen a seesaw struggle
between the World Trade Organization and civil
society. In Seattle, big power disagreements, the
revolt of the developing countries, and massive civil
society mobilization brought down the “bicycle of
liberalization”, to borrow C. Fred Bergsten’s description
of the WTO as bicycle which can only remain
upright while it is moving forward with its free-trade
agenda. (1)

The bicycle was set upright in Doha, when the
absence of civil society mobilizations allowed the big
trading powers to bamboozle developing countries to
sign on to the so-called Doha Development Agenda to
expand the ambit of the WTO. Then in Cancun, in
September 2003, a better-organized South cum civil
society mobilizations inside and outside the Cancun
Convention Center, the tragic climax of which was the
suicide of Korean farmer Lee Kyung Hae, brought the
bicycle of liberalization down again.

Our victory was short-lived for the equivalent of
a coup was mounted at a General Council meeting in
late July 2004 in order to restart the stalled “Doha
Round” of trade negotiations on terms favorable to the
North. The WTO is upright again and is moving with
momentum towards the 6^th Ministerial in Hong Kong
to be held in mid-December 2005.

Despite the apparent current stumbling blocks in
pre-Hong Kong negotiations (for example over tariff
reduction formulas, disciplining domestic support and
the elimination of export subsidies), there are disturbing
signs of convergence. For example, India and Brazil
may be further co-opted into meeting the demands of
the EU and US in exchange for market access (for
Brazil) and concessions on the movement of persons
abroad to supply services (Mode 4) (for India).

That the WTO is an institution that can be
reformed to serve as a vehicle for a more benign kind
of globalization is one of the illusions that has been
left behind by these developments. The one positive
element in the 2001 Doha Declaration-the clear
statement that public health concerns take precedence
over “intellectual property rights”-was nullified by Big
Pharma’s successful effort to make well nigh impossible
the export of generic life-saving drugs from
developing countries with manufacturing capacity
to developing countries with none by imposing
onerous stipulations on both importers and export-
WTO Reform, Global Civil Society
and The Road To Hong Kong
ers. So unacceptable and cumbersome were the
conditions imposed by the drug companies in the
decision adopted in August 2003 that no developing
country facing an HIV AIDS emergency took
advantage of the temporary waiver from Article 31
(f) of TRIPs provided for by the decision.

That reform is mission impossible was
underlined by the Cancun ministerial in September
2003, when the EU and the US provoked the
collapse of the ministerial rather than significantly
reduce their high levels of support for their agricultural
interests or retreat in their effort to expand the
WTO’s jurisdiction to investment and other
economic activities beyond trade. The historic
walkout from the Green Room led by African
delegates was the only appropriate response to the
intransigence of the North.

The so-called July Framework adopted at the
WTO General Council meeting in Geneva in the late
summer of 2004 is another glaring example of stonewalling
by the developed countries. Practically all the
key concerns of the South were subordinated to the
industrial countries’ agenda of defending their high
levels of agricultural subsidization, bringing down
non-agricultural tariffs, pushing the so-called “New
Issues” agenda, and pressing developing countries to
make offers for the liberalization of services. In
contrast to more optimistic earlier assessments of the
possibilities of advancing developing country
interests in the WTO via a strategy of reform, Oxfam
International, for instance, bleakly characterized the
July Framework as “a minimal agreement that keeps
talks and the WTO afloat, but fails to bridge continuing
stark disagreements between developing and
developed countries, let alone guarantee a prodevelopment
outcome.” (2)

Not surprisingly, there is little talk these days
about “social clauses,” “environmental clauses,”
measures to institutionalize the priority of public
health concerns over patent rights, or agricultural
market access reforms as the key demands of an
agenda to reform the WTO. In the months leading
up to the Cancun meeting, civil society, operating
under the principle that no deal is better than a bad
deal, eventually coalesced around a strategy of
derailing the ministerial. If anything, the prospects
of a good deal are even more distant as we move
towards Hong Kong. The strategy of derailing the
ministerial is even more relevant today.

The July Framework’s key agreements illustrate
why reform of the WTO is a dead end as a strategy for
developing countries and global civil society.

2. THE KEY AGREEMENTS

(A) INTRANSIGENCE IN AGRICULTURE

(See Section 3, Part 1 of The Derailer’s Guide to the
WTO for further details)

In Cancun, the firm stand adopted by the Group of 20
and Group of 33 against the demands of the United
States and the European Union for more access to
their markets while maintaining the high levels of
subsidization of American and European agriculture
prevented the initiation of negotiations for a new
Agreement on Agriculture that would be detrimental
to the interests of the South. Also key in frustrating
the agenda of the North was the tough stand of four
West African cotton producers-Benin, Burkina Faso,
Chad, and Mali-who demanded elimination of US
cotton subsidies that were ruining their production
as well as compensation for their losses.

Yet the “Framework for Establishing Modalities
in Agriculture” that emerged out of the late July
meeting produced agreements that were clearly
detrimental to the developing countries. Since July
2004, there have not been any developments in the
offers made by the rich industrialized nations of the
north which would address these concerns.
Essentially, the Agricultural Framework:

1) maintains or expands the key mechanisms of
“domestic support” or subsidization of EU and US
agriculture, the so-called Blue Box and Green Box;

2) creates a new restrictive category-that of “sensitive
products”-to hamper market access for
developing country products; while

3) makes conditional and non-timebound commitments
to eliminate export subsidies; and

4) pays lip service to the developing countries’
demands for the designation of “special products”
and other forms of special and differential treatment.

The flurry of proposals put forward by the EU
and US, in October and November 2005, have made
their offers in agriculture conditional on concessions
in services and industry. There is little being offered
in terms of Special Products or Special Safeguard
Mechanisms, and yet there are even greater demands
on tariff reductions and market access in developing
countries. At the same time, there is still little
progress on disciplining the Blue Box, capping the
Green Box or firmly eliminating export subsidies.

The balance of gains and losses is clearly on
the side of the trade superpowers of the North,
particularly the United States. On top of this,
developed countries rejected the demand of the West
African cotton producers that the elimination of cotton
subsidies and compensation for damages to their
production be treated as a separate, stand-alone item
of negotiations. Instead, the issue would be subsumed
under the general agricultural negotiations,
thus guaranteeing that its resolution would be
hostage to progress in these talks. This underlined
how eliciting even the slightest concession on an
issue that involved such manifest injustice was
next to impossible, even if that item had been a
central factor contributing to the collapse of the
Cancun Ministerial. (3)

(B) RATCHETING UP THE PRESSURE IN SERVICES

(See Section 3, Part 2 of The Derailer’s Guide to the
WTO for further details)

The Framework Agreement eliminates the room for
manœuvre of developing countries in the negotiations
on the General Agreement on Trade in Services
(GATS), which were previously pursued on a separate
track from the Doha Round negotiations. (5) By
formally including them in the Doha Round, thus
effectively making them part of the “single undertaking,”
the Agreement increases the pressure on
developing countries to open up their services.

Indeed, the text calls for governments to submit initial
or revised offers of services to be opened up by May
2005. To date only about 92 developing countries
have submitted offers owing to technical difficulties
assessing which service sectors to open up owing to
great uncertainty as to how liberalization would affect
these sectors. (6)

By formally tying the services negotiations to
the negotiations in other areas, the Framework allows
the EU and US, in particular, to hold the negotiations
in agriculture hostage to the services negotiations,
and vice versa, by conditioning their “concessions” in
one area dependent on their gains in the other.
With 50 per cent of the GDP of developing
countries now accounted for by services, access to
this market is the dominant concern of the Framework.

At stake is the privatization of public services (such as
energy and education) and the commons (such as
water) by foreign owned multinationals. Under GATS,
governments are effectively prevented from exercising
national control over these companies and would
therefore be unable to regulate prices, ensure universal
coverage of services or oversee labour standards.

Such policies and practices will be locked by GATS
and will not be able to be changed, even where they
negatively impact upon the population or the
economy.

Under current proposals, any commitments to
liberalisation in Mode 4 (presence of natural persons
abroad to supply a service) appear to be limited to the
temporary movement of skilled professionals. There is
also ambiguity and a lack of predictability with respect
to the current offers. (7)

Developed countries, led by the European Union
(EU), are now proposing a “benchmark” approach to
speed up the negotiations. This new approach aims to
identify 10 key sectors in the GATS, from which
developing countries will be asked to choose 6-7
sectors in which they must make minimum commitments
on. This process, known as benchmarking,
would remove any flexibilities under the existing
request-offer model, and enforce the reduction of
tariffs on commercially sensitive industries vital for
development.

This accelerated and binding process may be the
death knell for public services.

(C) NON-AGRICULTURAL MARKET ACCESS AND THE SPECTER
OF DE-INDUSTRIALIZATION

(See Section 3, Part 3 of The Derailer’s Guide to the
WTO for further details)

The give-no-quarter posture of the trade superpowers
was evident as well on the issue of market access for
non-agricultural commodities (“non-agricultural market
access” or NAMA).

The agreement on NAMA, and subsequent
proposals by the US and EU, are based on the socalled
“Derbez Text” floated during the Cancun
ministerial (named after the Mexican Secretary for
Foreign Affairs Luis Derbez, who was chairing the
ministerial), which was rejected by many developing
countries.

The key reasons for the rejection were a nonlinear
formula for tariff reduction, sectoral negotiations,
and weak special and differential treatment. The
non-linear formula, notes UNCTAD, would require
“deeper cuts for higher tariffs,” so that it “would result
in greater tariff cuts for many developing countries
because they generally maintain higher bound tariff
structures.” (4) This would be contrary to the provision
of “less than full reciprocity” for developing
countries under the principle of Special and Differential
Treatment. Despite this concern, the July Framework
provides for continuation of work on a non-linear
formula.

Developing countries with already relatively low
tariffs on non-agricultural products also expressed
concern over the “sectoral initiative” that proposed
deep tariff cuts on 100 per cent of all categories of
imported commodities falling under a designated
industrial sector such as, for instance, “electrical and
electronic products” or “textiles and garments.” As
UNCTAD has noted, “Many developing countries and
LDCs have already liberalized unilaterally, including
under structural adjustment programs, and their
applied rates are often low. Binding those rates close
to applied rates may thus limit their policy space for
industrial development purposes.” Indeed, deindustrialization,
which began under structural
adjustment programs, is feared to accelerate under
NAMA. On the other hand, the US National Association
of Manufacturers saw the July Framework’s
provisions on NAMA as “a huge accomplishment, and
a big win for the WTO, the United States, and the
World economy. The really big accomplishment is that
all countries have accepted the principle of big tariff
cuts and sectoral tariff elimination.”

NAMA, together with agriculture (AoA). may be
the deal breaker at the WTO in December. There is still
a lack of consensus over a number of issues including
the tariff reduction formula, the binding of tariffs, the
status of the July Framework text and acceptability of
the so-called Pakistan compromise. At the same time,
there are disturbing signs of convergence as we
approach Hong Kong.

 3. PLACING THE DEVELOPMENT AGENDA ON THE BACKBURNER

Like the Doha Declaration of 2001, the July Framework
and on-going negotiations in the lead up to Hong
Kong, give short shrift to the main concerns of
developing countries:

Patenting under TRIPS. There are outstanding
issues related to the Trade Related Intellectual
Property Rights Agreement (TRIPs) such as the
revising Article 27.3 (b) to prohibit the patenting of
life; the relationship between TRIPs and the Convention
on Biodiversity; and the protection of traditional
knowledge and folklore. However, there is simply an
affirmation in the July Framework to move ahead in the
negotiations with no specific goals, except for members
to submit new or revised offers by May 2005.

Neither are there guidelines to revise TRIPs Article 31
(f) to institutionalize the Doha Declaration’s putting
public health concerns over intellectual property
rights.

Special and Differential Treatment. The
institutionalization of Special and Differential Treatment,
a key principle of development, remains as
distant as ever, with the Framework simply providing
for work to continue to outstanding issues. The
reason for the lack of movement here is that “developed
countries refuse to make Special and Differential
Treatment (SDT) operational and effective until the
more advanced developing countries are graduated
out of SDT. This premise is fundamentally flawed, as
all developing countries need special and differential
treatment, given widespread poverty and the need to
protect infant industries in the developing world.
Denying them SDT would amount to kicking away the
ladder.” (8)

Implementation. Implementation has been a
burning issue for most developing countries owing to
the cumbersome process and, for many, high costs of
making their trade policies, regulations, and laws
“WTO -consistent.” Yet the July Framework does not
mention any implementation issue of significance to
the developing countries. In contrast, the only
implementation issue explicitly addressed is one that is
of concern mainly to the developed countries: the
extension of additional protection on geographical
indications (GI) on commodities other than wines and
spirits

 4. PROCESS: INTIMIDATING AND OUT-MANOEUVERING THE SOUTH

How could such an Agreement come about after
Cancun, when the developing countries appeared to
have come some way towards altering the balance of
power?

The answer is by regaining control of the
negotiating process via divide and conquer tactics,
unfair negotiating tactics, and, most important, an
institutional coup. As Oxfam International saw it, “The
[July 2004] Council meeting was... characterized by a
non-transparent, non-inclusive process, dominated by
big trading powers and characterized by brinkmanship
and power play.” (9) The lesson: the procedures of the
WTO are heavily weighted against the South.

(A) DIVIDING AND NEUTRALIZING THE G20

The G20 formation of big developing countries “broke
the monopoly over trade negotiations formerly
enjoyed by the US and the EU,” according to Brazilian
Ambassador Clodoaldo Hugueney during the Mumbai
Social Forum in January 2004. The G20 was not alone,
however, with the G33, which was formed mainly by
smaller agricultural countries, and the G 90, which
formed in opposition to the new issues, playing
important roles. (10)

Initially, the US response was to pursue a
unilateralist course outside the WTO via a dual
strategy of sewing up bilateral and multilateral free
trade agreements, while at the same time destroying
the G20. (11) By the spring of 2004, however,
Washington’s two-track strategy was running into
trouble. The Free Trade Area of the Americas (FTAA)
that it wanted failed to materialize at the ministerial
summit in Miami in November 2003, and it also began
to realize that bilateral agreements could complement
but never substitute for a comprehensive, multilateral
free trade framework to promote corporate trade
interests. At the same time, the G20, despite the initial
defections, held firm.

To get the WTO restarted, Washington, working
closely with Brussels, shifted gears. Instead of trying
to destroy or undermine the G20, they moved to make
its leaders, Brazil and India, a central part of the
negotiations in agriculture, which was the key obstacle
to any further moves at liberalization. Thus was formed
in early April the informal grouping called the Five
Interested Parties (FIPS or G5), composed of the US,
EU, Australia, Brazil, and India. The ostensible aim of
this move was to organize the discussion with close to
100 developing countries by having India and Brazil
“represent” them. The FIPS, in short, was intended as
some sort of Green Room, except the representation of
developing countries in it was far more limited than in
the regular Green Room. It was in close consultation
with this exclusive grouping that WTO Agriculture
Committee Chairman Tim Groser produced the proposed
agriculture text of the July Framework.

The US-EU strategy was apparently to bring
Brazil and India into the core group of the negotiations,
and then accede to these countries’ core
demands in order to detach them from the rest of the
developing countries.

India. The key concern for India was to avoid the socalled
“Swiss Formula” for cutting tariffs that would
require deeper cuts on its highest agricultural tariffs
relative to other tariffs, something on which it saw eye
to eye with the European Union. According to one
developing country negotiator, India’s main focus for
the General Council was protecting its tariffs and it
was not going to push hard on the issue of eliminating
agricultural subsidies so as not to endanger the
EU’s support for its position on tariffs. (12) Both the
EU and India were comfortable with a “Uruguay
Round” approach to tariff cuts that would focus on an
average cut across all agricultural lines and not
“discriminate” against their highest agricultural tariffs.

Such a formula, they felt, would allow them to
maintain tariff levels that would be high enough for
their most protected commodities to survive another
round of cuts. There were developing countries,
however, for which even a Uruguay Round approach
would be too drastic, for example Honduras, Sri Lanka
and Indonesia.

Brazil. For Brazil on the other hand, removing
agricultural subsidies was its concern, and here it got
its way-or thought it did. The final text affirmed the
phase-out of export subsidies as well as certain
categories of export credits. The big winner with the
phase-out of subsidies is said to be Brazil, with some
estimates placing its gains as some $10 billion.

According to Brazilian Foreign Minister Celso Amorim,
the July decision marked the “beginning of the end” of
export subsidies. Yet, as noted earlier, the Brazilian
“gains” are not secure unless locked in by the
modalities of the negotiations. A specific end-date for
the elimination of export subsidies will only be
clinched in the next phase of discussions. Moreover,
even when elimination has supposedly taken place,
the EU has been known to replace export subsidies
with indirect export subsidies by way of direct
payments to farmers under the Green Box. This is, in
fact, the intention of the current Common Agricultural
Policy (CAP) reform. Furthermore, the framework left
untouched the Green Box, which houses up to 70 per
cent of US’ total subsidies. Even the most optimistic
analysts cannot say for certain that overall levels of
support from the two agricultural giants will be
brought down. In fact, it is predicted that subsidy
levels will be maintained if not increased.

It was not that lndia and Brazil were not sensitive
to the demands of other developing countries. In
fact, they were given high marks for consulting the
different developing country groupings. It was simply
that by becoming central actors in the elaboration of
the proposed framework, they had put themselves into
an impossible situation. And the more meeting their
own interests began to diverge from a strategy of
promoting the interests of the bulk of the developing
countries, the more they trumpeted the claim that the
July Agreement on agriculture was a victory for the
South. It is testimony to the prestige of India and
Brazil among other countries in the South that it was
only belatedly, a few weeks after the July Accord, that
the reality began to sink in among many developing
countries that they had been out-manoeuvered.
With a framework agreement on agriculture-the
most decisive negotiating area for most developing
countries-in place, the trade superpowers rode the
momentum to pressure developing countries into
agreements on NAMA, services, trade facilitation and
other areas.

(B) WILY NEGOTIATING TACTICS

In addition to veiled threats and power plays, a wily
negotiating strategy on the part of the EU and the US
was another reason for the developing country
setback. The moves of the trade superpowers were
calculated to put the developing countries on the
defensive. Often, working together in a coordinated
fashion, they had the negotiating advantage vis-à-vis
a much larger set of countries whose many interests
had to be reconciled with much effort into common
negotiating positions.

One example of the Washington’s skillful
exploitation of its negotiating advantage was its
strategy on the Blue Box in the agricultural talks. To
get a new, expanded Blue Box, Washington distracted
the developing countries’ attention by putting forward
the demand that they reduce their de minimis domestic
supports (that is, the allowable rate of subsidization of
their production). Thrown on the defensive, these
governments spent so much energy justifying their
subsidies that they were only too relieved when the
US stepped back to compromise on the issue in return
for their agreeing to the expansion of the Blue Box.

Similarly, just before the General Council
meeting, the European Union suddenly introduced the
proposal for “sensitive products” to protect some 20-
40 per cent of its products from significant tariff cuts.
Worried that the EU might put blocks to their demand
for protecting “special products” or commodities
essential to their food security, the developing country
negotiators acquiesced.

(C) INSTITUTIONAL COUP

But probably the most important process or procedural
victory registered by the trade superpowers was to
shift the effective locus of decision-making from the
ministerial to the General Council -though this was, of
course, accomplished with the support of influential
governments such as India and Brazil.

After the collapse of the Cancun ministerial, the
developed country governments apparently realized
that the ministerial, the prime decision-making mechanism
of the WTO, is also its key point of vulnerability.
The WTO Consensus rule-a process that has been
managed by the so-called Quad, composed of the US,
EU, Japan, and Canada -works best in smaller, more
non-transparent settings. (13) In a larger, more open
meeting, it can become a disaster.

Ministerials, the trade superpowers realized,
invite a debacle for several reasons:
– They attract citizens and citizens’ groups, thus
subjecting negotiators to popular pressure.
– They ensure the presence of the press, thus forcing
the proceedings to be less non-transparent than
usual.
– They highlight the contradiction between formal
sessions, which are reserved for speechmaking, and
informal meetings where the real decisions are
made, thus exposing the organization to the charge
of being non-transparent and non-democratic.
– They bring representatives of national governments,
such as trade ministers and environmental ministers,
many of whom are more sensitive than Geneva-based
negotiators to popular pressure and are not socialized
into the Geneva culture of negotiations.

The interaction of these elements produced the
collapse of the third ministerial in Seattle and the fifth
ministerial in Cancun, with the role of civil society
mobilizations being clearly most decisive in Seattle.
The absence of one vital element-civil society mobilizations-
in Doha, Qatar, contributed to a manageable,
successful ministerial that was a disaster for the
developing countries. (14)

Learning from Doha, the trade superpowers, with
the acquiescence of influential countries like India and
Brazil, manoeuvered to push the General Council,
which meets in Geneva, to make the major decisions
that traditionally belonged to a ministerial. The
Council meeting in Geneva at the height of summer
consisted mainly of professional negotiators and other
governmental representatives of non-ministerial rank.
Indeed, there were said to be only around 40 ministerial
level representatives out of 147 present. Equally
important, there was but a sprinkling of civil society
organizations, and those who were present were
prevented from demonstrating by the Swiss police.

Many of them were also banned from being present at
the WTO proceedings, thus severely restricting their
interaction with delegates.

In a very real sense, then, the July General
Council meeting was an institutional coup, one that
could provide a precedent for future decision-making.
UNCTAD warns that Hong Kong may be transformed
into a ‘stocktaking session’. (15)

 5. A DERAILMENT STRATEGY FOR HONG KONG

(A) NO DEAL IS BETTER THAN A BAD DEAL

The dynamics of the July Framework make it highly
unlikely that the developing countries will get a
ministerial decision which would serve their interests.
The psychological war that was so prominent in the
lead-up to the July Agreement is again in motion in the
lead up to Hong Kong. Already, developed country
groups have warned that unless the poorer countries
make better offers on their services, “Hong Kong will
fail.” (16) Likewise, at a recent meeting in Mombassa,
Kenya, developing country demands for movement on
Special and Differential Treatment met with the same
response: the more advanced developing countries
should be graduated out of SDT. (17) But on 1
November 2005, the G33 appeared to stand firm that SP
and SSM must be included with the same level of
specificity as the other areas of market access pillar.

Also, there is as yet no sign that the EU is prepared in
Hong Kong to set a specific date for the ending of
export subsidies. (18) At the same time, France is
questioning the EU’s capacity to negotiate tariff and
subsidy reductions on its behalf, and is threatening to
veto EU proposals, And the US has reiterated that it is
no mood to make concessions on Mode 4 of GATS.
(19)

The US-EU “psywar,” unfortunately, is taking
its toll on the South. Instead of standing up to
pressure from the North, the G20, in its final
declaration after its meeting in New Delhi on the
third week of March 2005, stated that an agreement
on modalities in the Hong Kong ministerial must be
compatible with the July Framework and in line with
the Doha Declaration; that negotiations on agriculture
must be “intensified to stimulate progress in all
other areas of negotiation” (a persistent demand of
the EU and US); and that a first “approximation” of
modalities must be ready for the General Council
meeting in July 2005.

With little chance of getting a conclusion to
the Doha Round that would be beneficial to the
interests of developing countries, the only viable
strategy is to prevent a ministerial agreement that
would simply perpetuate the inequities of the
current system. In Cancun, the developing countries
and civil society ultimately came around to the
position that no deal was better than a bad deal.

With the July Agreement already serving as a
framework for the Hong Kong Ministerial document,
a strategy to derail the Ministerial is even
more valid today. No deal is better than a bad deal
since the only possible deal is one that would
further consolidate the underdevelopment,
marginalization, and immiseration of the South.

In brief, here are some reasons why:

1. The Framework Agreement for Agriculture is
nothing but a massive dumping enterprise aimed at
developing countries that will exacerbate the
massive displacement of small farmers taking place
under the current Agreement on Agriculture.

2. NAMA (Non-Agricultural Market Access) is a
prescription for the deindustrialization of developing
countries, increased unemployment, and bankruptcy
of small, medium, and even big national enterprises.

3. The July Framework creates unwarranted pressure
on developing countries to open up their services to
transnational corporate control.

4. Trade facilitation negotiations are mainly the
opening wedge for the other, more threatening new/
Singapore issues (investment, competition policy,
government procurement)

5. The July Framework and subsequent negotiations
prioritise the agenda of the developed countries and
disregards the primary concerns of developing
countries, which are special and differential treatment
and implementation issues.

(B) NO TO A “STOCK-TAKING MINISTERIAL

If derailing the ministerial is the key strategic objective,
then it is important first of all to make sure that the
ministerial is a decision-making ministerial and is not
converted by the developed countries into a stocktaking
exercise whose input would feed in to a General
Council Meeting like the July 2004 meeting. This
danger must not be underestimated since, as noted
earlier, the big trading powers have become paranoid
about the way large mobilizations can interact in
unmanageable ways with the postures of the developing
countries at the height of negotiations.

(C) PREVENTING CONSENSUS

Assuming that the ministerial remains a decisionmaking
ministerial, the movement must focus on the
key point of vulnerability of the WTO decision-making
process: the consensus rule. Concretely, it will mean
preventing consensus from emerging either before or
during Hong Kong in any of the key negotiating areas.
The earlier gridlock can be brought to prevail in the
negotiations the better it will be for the developing
countries.

 6. TAKING STEPS TO DERAIL HONG KONG

Derailing the ministerial will be a complex operation
that will involve articulating mass campaigns at the
national level and Geneva-based lobbying and
mobilization leading up to coordinated lobby work and
mass mobilizations in Hong Kong and elsewhere
during the mid-December ministerial.

(A) LOBBYING YOUR WTO TRADE DELEGATION

Much of this work can take place by lobbying your
WTO trade negotiators based in your capitals or in
Geneva.

– Pressure Brazil and India not to take any more
unilateral initiatives and to carefully coordinate
their moves not only with other members of the
G20 but also with other blocs, such as the G33
and the G90. India and Brazil should be pressured
to leave FIPS (Five Interested Parties) and
put pressure on all parties (e.g., G20 and EU) to
dissolve FIPS. To achieve this, other developing
countries should be encouraged to openly speak
up against FIPS as the main negotiating forum
for the agricultural interests of all developing
countries. This is rather urgent since the FIP
process has resumed following the mini-ministerial
in Kenya in early March, with much the same
dynamics. As a TIP/IATP update on events in
Geneva warns, the process has dangerous
implications not only for the agricultural negotiations:
“Some sources in Geneva say this type of
process-possibly with the addition of a few more
key countries-is considered as a possible model
for other areas of negotiations, such as NAMA.

This approach to negotiations shows the
continued tendency for WTO Members to
conduct negotiations that claim to be on behalf
of everyone, yet only reflect the interests of the
biggest powers.” (20)

– Pressure the G20 to push a strong collective stand,
especially against the Agriculture Framework and
NAMA.

– Pressure G33 to strongly protest and resist efforts
by the EU to impose the category of sensitive
products and expose the lack of real commitment of
developed countries to special safeguard mechanisms
and special products.

– Pressure G90 especially to stymie negotiations on
trade facilitation by portraying this as really an
opening wedge for other, more threatening new
issues.

– Raise the process and democracy issue strongly by
denouncing the General Council as usurping the
functions of the Ministerial. Denounce and oppose
efforts to make Hong Kong a “stock taking”
session rather than a decision-making session.

– Oppose the holding of more “mini-ministerials”
and other informal decision-making processes.
Justified as necessary to facilitate the negotiation
process, WTO mini-ministerials, where a few
handpicked countries are invited to attend, are
informal processes that have actually been used
to undermine the formal decision-making process
of the WTO based on majority rule. Not surprisingly,
mini-ministerials are often used to reach
decisions unfavorable to the South. (21) Already,
in 2005, mini-ministerials have been held in
Davos, Switzerland, in late January, and
Mombassa, Kenya, in early April. A miniministerial
on NAMA is slated for Tokyo on April
10 and another for Paris on May 3-4.

Also to be opposed are informal group
decision-making meetings such as “Senior Officials
Meetings” (SOM), one of which will be hosted by
Canada in Geneva on April 18-19, where about 30
countries are expected to attend.

This proliferation of informal meetings
dominated by the North reveal that as Hong Kong
approaches, the decision-making process is
becoming more informal and non-transparent to
conceal the escalation of pressure on the developing
countries to make concessions.

(B) NATIONAL MASS CAMPAIGNS

At this level, the priorities should be to:
– Expose the transnational corporate agenda behind
the agreement on agriculture (AOA), NAMA, and
GATS.
– Concentrate on building up comprehensive national
mass campaigns against the July Framework. This
will mean getting NGOs working on the WTO to
work more closely with trade unions, farmers’
groups, and other social movements.
– Create or consolidate lobby work on legislators and
trade bodies, and coordinate this with national
mass campaigns.
– Coordinate national level lobby work and national
mass campaigns with pressure work on government
negotiators in Geneva at critical junctures.
– Work closely with media in order to get them to
report more critically on WTO processes.

(C) HONG KONG, D-DAY, 13-18 DECEMBER 2005

Hong Kong must be seen not as the start but as the
culmination of an international process that began
months before.

As in Cancun, numbers will make a difference.
Thus no effort must be spared to draw thousands of
demonstrators from all over the world, but particularly
from North and Southeast Asia and from Hong Kong
itself. Mobilizing the numbers for Hong Kong must
be a central part of the agenda of the national mass
campaigns, especially those in Northeast and Southeast
Asia. Mass demonstrations should be staged in
other parts of the world, along with acts of civil
disobedience, and these actions should be synchronized
with the Hong Kong actions.
We must prepare not only for demonstrations
and teach-ins but also for massive civil disobedience.
In this regard, organizers must be prepared to appeal
to Hong Kong authorities’ rhetoric about respecting
individual and civil rights to create maximum space for
different varieties of mass action.

Drawing from the successful tactics of the Our
World is not for Sale (OWINFS) network in Cancun,
there must be effective but flexible coordination of
lobby strategy within the ministerial, civil protest
within the ministerial premises, and mass protests and
civil disobedience outside the ministerial meetings.

The Hong Kong People’s Alliance on the WTO
is the coordinating center for major activities.
Broad unitary coordination with tactical
flexibility should be the principle of the mass/lobby
actions.

 7. DON’T FORGET THE SECOND FRONT

While making the Hong Kong ministerial a major
objective, we should not lose sight of the fact that the
WTO is one of two fronts where the trade superpowers
are pursuing their trade liberalization agenda. The
other is regional and bilateral agreements such as the
Free Trade of the Americas and the US-Thailand Free
Trade Agreement. The trend is disturbing. There are
215 regional trade agreements in force today and the
number is expected to exceed 300 by 2007. (22) Many
of these are North-South RTAs where “negotiations
tend to result in deeper market access and higher
regulatory standards than negotiations at the multilateral
level.” (23) Thus even as we focus on the WTO,
we must not let down our guard against developed
country initiatives to corral developing countries into
FTAs and RTAs.

At the same time, we should not be fooled into
believing that the WTO is more acceptable than FTAs
and RTAs because it is a multilateral forum with “universal
rules” that every country, big and small, is supposed
to comply with. If recent US and EU diplomacy is any
indication, FTAs and RTAs are seen as complementary,
not contradictory to the WTO, in pushing the interests
of the trading powers. The WTO sets an initial level of
mandatory liberalization that RTAs can build on for more
thoroughgoing liberalization.

 8. ALTERNATIVES

Following a derailment strategy will bring up the
inevitable question about what the alternative is.
Components of an alternative framework could be
informed by the following:
– the WTO is a relatively new organization, and
world trade functioned pretty well without a
centralized institution and system of rules before
its establishment in 1995;
– the alternative to a centralized global institution like
the WTO is not “chaos,” as the big trading powers
would like to paint it, but more space that would
enable countries to adopt diverse national strategies
that respond to the values, priorities, and
rhythms of different societies (as opposed to the
neo-liberal, one-shoe-fits-all model imposed by the
WTO);
the interests of developing countries can best be
served by a pluralistic system of economic governance
in which many institutions such as the
United Nations Conference on Trade and Development
(UNCTAD), International Labor Organization,
multilateral environmental agreements, regional
economic blocs, and a radically scaled down and
disempowered WTO, check and balance one
another and thus provide countries with “developmental
space”;
regional economic blocs formed on the principle of
subordinating trade to development needs and
coordinating economic activities other than trade
while respecting the principle of subsidiarity (that
is, that production should, as much as possible, be
locally based) may be an important component of
the alternative to the WTO-centered governance of
neo-liberal globalization.

 9. CONCLUSION

The stakes are high as we approach Hong Kong.
One outcome could be that the WTO finally gets to be
consolidated as the engine of liberalization of trade
and other key dimensions of economic activity such as
investment. Another is that it unravels a third time and
becomes permanently crippled as an agent of the
global neo-liberal agenda. Hong Kong could be the
Stalingrad of the WTO, its high water mark, when the
drive to roll it back gets the upper hand and gains an
unstoppable momentum. The outcome, to a great
extent, depends on us-our determination, our strategy,
our tactics.

Endnotes

1. C. Fred Bergsten, Director of Institute of International
Economics, Testimony before US Senate,
Washington, DC, Oct. 13, 1994.

2. Oxfam International, “Arrested Development? WTO
July Framework Agreement Leaves Much to be
Done,” August 2004, p. 1.

3. Many civil society organizations see the problem with
the AOA as going beyond the US and EU’s efforts to
retain their subsidies. Even if the EU and US were to
do away with their subsidies, they argue, the
resulting global free trade framework would be
detrimental to smallholder peasant agriculture, which
would be forced to turn from serving the domestic
market to competing as well in the international
market. In this process, economies of scale, capital
needs, and effective market penetration would
unleash a process of concentration that would lead to
the displacement of small farmers and to
concentration of production under agribusiness.
Under a WTO framework, small farmers would also
continue to be subject to a patent regime serving not
their interests but those of northern agribusiness.
For these reasons, many farmers’ organizations
such as Via Campesina no longer see the WTO as a
suitable framework within which to promote the
interests of small farmers, both in the South and in
the North.

4. United Nations Conference on Trade and
Development (UNCTAD), “Review of Developments
and Issues in the Post-Doha Work Program of
Particular Concern to Developing Countries: a Post-
UNCTAD XI Perspective,” Note by the UNCTAD
Secretariat, Aug. 31, 2004, p. 12.

5. Alexandra Strickner, IATP, Personal Communication,
Porto Alegre, Jan. 29, 2005.

6. Estimated from UNCTAD, p. 13, and “Countries Warn
on Services Market Access, Fear Hong Kong
Failure,” Inside US Trade, Dec. 10, 2004

7. UNCTAD, p. 14.

8. Oxfam International, “One Minute to Midnight: Will
WTO Negotiations in July Deliver a Meaningful
Agreement?,” Oxfam Briefing Paper, No. 65, July
2004, p. 8

9. Oxfam International, “Arrested Development...,” p. 1

10. See fuller account of this in Walden Bello and Aileen
Kwa, “G 20 Leaders Succumb to Divide and Rule
Tactics: the Story Behind Washington’s Triumph in
Geneva,” Focus on the Global South website, posted
Aug. 10, 2004: http://www.focuweb.org/main/html/
Artcile 408.html? In fact, as Dot Keet reminds us, it
was the G 90, not the G 20, that started the walkout
that brought down the Fifth Ministerial. Statement at
Seminar on G 20, Porto Alegre, Jan 30, 2005.

11. Walden Bello and Aileen Kwa.. A longer account of
this is given in Walden Bello, Dilemmas of
Domination: the Unmaking of the American Empire
(New York: Metropolitan, 2005), pp. 179-192

12. The Indian government’s position on subsidies had
been watered down by its informal alliance with the
EU on the tariff issue after the Doha Ministerial
before the EU abandoned the Indians to align
themselves to a common position with the US in the
period leading up to Cancun.

13. Bergsten.

14. It must also be pointed out that there was one other
contextual factor working to the disadvantage of the
developing countries: the post-Sept. 11 atmosphere,
which the US exploited by claiming that failure of the
developing countries to move forward on multilateral
negotiations was tantamount to abetting terrorism.

15. UNCTAD, p. 7

16. “Countries Warn on Services Market Access...,”
Inside US Trade, Dec. 10, 2004

17. Washington Trade Daily, March7, 2005.

18. Owing to strong reactions from developing countries,
however, the EU may set a phase-out date before or
during the Hong Kong Ministerial. Nonetheless, as
we have pointed elsewhere, subsidization will
continue via other channels, like the Blue Box or the
Green Box.

19. “Countries Warn on Services Market Access...,”
Inside US Trade, Dec. 10, 2004

20. Carin Smaller, “Too Much, Too Fast: What Happened
to the Doha Development Agenda,” Trade Information
Project/Institute for Agriculture and Trade Policy
Geneva Office, March 24, 2005.

21. See Fatoumata Jawara and Aileen Kwa, Behind the
Scenes at the WTO (London: Zed, 2003), p. 280.

22. UNCTAD, p. 19

23. Ibid.

---

* Focus would like to thank Aileen Kwa and Alexandra
Strickner for their assistance in the preparation of this
paper. This article first appeared in Focus on Trade
#108, April 2005. http://www.focusweb.org. It is updated
as at November 2005.

---

The Derailer’s Guide to the WTO: Section 2

 Ten reasons why no deal is better than a bad deal

At the 6^th WTO Ministerial in Hong Kong, no deal is
better than a bad deal since the only possible deal
that can come out of ongoing negotiations is one that
would further consolidate the underdevelopment,
marginalisation and immiseration of the South. Here
are ten reasons why:

1. Dumping: A new deal would force developing
countries to open their agricultural markets further to
the entry of highly subsidized products, thereby
undercutting the prices of local produce, undermining
local livelihoods and exacerbating distress migration.

2. Domination: A new deal is about domination of
the world’s markets by the trading superpowers and
their transnational corporations, at the expense of
peoples’ rights and livelihoods.

3. Denial: Developing countries have repeatedly
called for mechanisms to protect their food security
and the livelihoods of their rural populations under the
Agreement on Agricutlure. The US and EU have
consistently denied them of these options.

4. De-Industrialization: A new deal would lead to
de-industrialization, and the killing off of fledgling
local and domestic industries in developing countries,
which will result in job losses, unemployment and
greater poverty.

5. Destruction: A new deal would force developing
countries to liberalise sensitive sectors such as
fisheries and forestry on which millions of rural
livelihoods depend. The Non-Agricultural Market
Access agreement (NAMA) would push for more
exports of fisheries and forestry products, destroying
small scale fisheries and communities.

6. Deprivation: A new deal would open up the
services sector to liberalisation, including critical
public services such as water, power, health and
education, limiting access to these services to only
those who can afford it and depriving everybody else.
By letting the Trade Related Intellectual Property
(TRIPs) Agreement remain as it is, millions of people in
the world will be deprived access to essential and life
saving drugs.

7. Disempowered: The General Agreement on
Trade in Services (GATS) would ‘lock-in’ countries to
liberalization of services and limit the options for
developing countries to regulate these service sectors
in accordance with their development priorities. The
new proposed “benchmarking” approach in GATS
would force countries to open up sectors that they do
not want to liberalize and undermine public interest
everywhere.

8. Diminished: By further entrenching the power of
the rich trading nations of the North, a new deal would
aggravate the imbalance in world trade instead of
address it. This will diminish any hopes for least
developed and developing countries to have true
development.

9. Danger: A new deal would lead to more not less
WTO-plus bilateral and regional free trade agreements,
as it would set the ground for deeper and faster
liberalization. Intellectual Property Rules (IPRs) under
the WTO and WTO-plus trade agreements will deepen
threats to bio-diversity, traditional knowledge and the
rights of indigenous peoples all over the world.

10. Development: And finally, no deal is better than
a bad deal because there is nothing developmental
about this round and there is absolutely nothing for
developing countries and majority of the world’s
peoples to gain from this deal.

The Derailer’s Guide to the WTO: Section 3, Part 1

 Intransigence in Agriculture
Agreement On Agriculture (AoA)

What is the AoA?

The Agreement on Agriculture (AoA) is one of the
most controversial agreements under the World
Trade Organization (1) (WTO) regime. The objective
of the AoA, which came into effect in 1995, is to
reduce barriers to trade (such as tariffs, quotas and
subsidies) thereby making domestic and global
agricultural sectors more market-oriented. The rationale
is that the removal of such trade-distorting
measures will increase the volume in trade from which
all countries, including developing countries, will
benefit. Focus on the Global South however
questions the validity of this neo-liberal argument,
citing countless reports detailing the negative effects
of WTO-enforced liberalization on developing
countries and their mostly rural populations.

The AoA is anchored on three main provisions
or ‘pillars’ - Market Access, Domestic Support and
Export Competition. Negotiations at the WTO are
currently taking place in all three of the pillars, and
cover such topics as tariffs, export subsidies and
the permitted levels of support provided to farmers.

The three pillars of the AoA are: (2)

Market access is the extent to which a country
regulates the importation of foreign products. The
market access provisions of the AoA aim to progressively
lower protectionist barriers to trade. The
agreement calls for the conversion of all non-tariff
barriers (such as quotas) to tariffs, in a process
known as tariffication, and the reduction of all
tariffs:
– by 36% on average, and a minimum of 15 % per
tariff line for developed countries; and,
– by 24 % on average, and a minimum of 10 % per
tariff line for developing countries.

Members are also directed to make concessions
on liberalization through other mechanisms such as
tariff rate quotas (TRQs) and minimum access volumes
(MAVs). (3)

The importance of this pillar lies in the ability of a
country to protect its domestic agricultural production
(including essential crops such as rice and corn), its
local farmers and the livelihoods of its rural populations.

That is why many developing countries are
opposed to cuts to their existing tariffs, which in the
absence of expensive subsidies, have been their only
means to support their farmers. They are demanding
mechanisms to be established to protect them from
surges of commodity imports or a sudden fall in the
world price of commodities. At the same time, many
developing countries are also demanding greater
access to developed country markets, through the
reduction of developed countries’ import tariffs, so that
developing countries are able sell their agricultural
production overseas.

Domestic Support refers to monetary support given
by governments to their agricultural producers either
for production, or in more general forms, such as
infrastructure and research. The AoA classifies these
supports into three boxes:
– the Amber Box for production and trade distorting
subsidies;
– the Blue Box for direct payments under productionlimiting
programmes; and,
– the Green Box for minimally or non-trade distorting
support.

Support is also classified as either those with
ceiling levels and those without ceiling levels (caps). A
de minimis clause in the agreement allows countries to
maintain a certain level of trade and production
distorting support (measured as Aggregate Measure of
Support or AMS).

Domestic support is one of the most controversial
issues being negotiated at the WTO. That is
because much of the support that the EU and the US
provide to their farmers is hidden or wrongly classified
in the boxes. The result is that support, which should
be illegal or at least disciplined under WTO rules,
continues to distort trade. Developing country farmers
feel the effects of this the most, as trade distorting
domestic support depresses world market prices and
results in dumping of cheap products in developing
country markets. By shifting their support for farmers
into an (expanded) blue and (uncapped) green boxes,
the EU and US will continue to dump their products
on the developing world (see below for further details).

Export Competition refers to support or subsidies
that allow countries to directly support their exporters.
The consequence is that the rich developed countries
of the north are able to export goods on the world
market at prices lower than those in their domestic
markets, and often at prices which are significantly
lower than their cost of production (also known as
dumping). As Oxfam points out, the EU exports sugar
and beef at 44 and 47 per cent respectively of their
internal cost of production. Similarly U.S. wheat is sold
abroad at an average price of 35% of what it cost to
produce it and cotton is sold abroad at an average
price of 47% of what it cost to produce. (4)

The AoA aims to set disciplines in export
subsidies, including among others:
– direct subsidies, including payments in kind,
contingent on export performance;
– sale by governments or their agencies of noncommercial
stocks at prices below domestic market
prices; and,
– internal transport subsidies for exports.

However, the reality is that developed countries
continue to dump goods on developing countries. The
latest negotiations under the July Framework do not
explicitly set a time frame for the elimination of export
subsidies.

The Indian dairy sector
under threat from dumping

In India, the dairy sector has been hit hard by
subsidised exports from the EU. In 1999-2000 India
imported over 130,000 tonnes of EU skim milk powder.
This was the result of EUR 5 million export subsidies
that were provided to EU producers. EU subsidies to
butter exports are also extortionately high. Consequently,
butter oil import into India has grown at an
average rate of 7.7% annually. This has had a dampening
effect on prices of ghee in the domestic market.
Ironically, India is the biggest producer of milk in the
world. What is more worrying for India is there are
now signs of declining productivity growth for many
agricultural products in India, which will have severe
implications for the majority of the population.

Devinder Sharma, WTO and Agriculture:
The Great Trade Robbery, 2003 (5)

Government of India statistics illustrate the consequences
of subsidised commodities: (6)
– sugar imports increased from 29000 tonnes in 1996-
97 to 932,300 tonnes in 2004-05;
– edible oil imports increased from 1.061 million
tonnes in 1995-96 to 5.290 tonnes in 2003-04; and,
– cotton imports increased from 29200 tonnes in
1996-97 to 387000 tonnes in 2001-2002.

The impact of WTO induced trade liberalisation
coupled with the removal of quantitative reduction
(QR) (under WTO obligations) and the reduction of
import tariffs, has resulted in the prices of several
commodities falling sharply.

For example in Kerala, since the removal of QRs
on 714 items in April 2000, most of the agricultural
commodities of Kerala have been showing a steady
decline in the market prices. The unprecedented fall in
prices of all cash crops have devastated the farmers of
Kerala. (7)

According to Department of Agriculture,
Government of Kerala, during 2000 the farmers of
Kerala have suffered an annual loss of Rs. 6645 crores (8) due to the price fall of major plantation crops alone,
such as coconut and rubber, making the Kerala
economy fragile and vulnerable.

‘The large scale of farmers suicide in India in
recent years is one of the severe impacts of WTO. In last
10 years and especially since India joined WTO in 1995,
more than 25000 farmers in different parts of the country
have committed suicides and it is still continuing. One of
the key reasons of the farmers’ suicide is the surge of
cheap subsidised imports of agricultural commodities.’
Senior farmer leader, Mr. Mahender Singh Tikait
of Bhartiya Kissan Union (BKU), India.

From Doha to Cancun

WTO Ministerials take place every two years and
bring together the trade ministers from all the WTO
member countries to make final decisions on trade
negotiations. The period from the Doha (4^th) to the
Cancun (5^th) Ministerial saw developing country
priorities and demands sidelined in the interests of the
larger northern trading powers.

At the WTO 4^th Ministerial Meeting in Doha,
Qatar in November 2001, a new comprehensive round
of trade negotiations was launched. In agriculture, the
Doha Development Agenda (DDA) mandates ‘substantial
improvements in market access; reductions of,
with a view to phasing out, all forms of export subsidies;
and substantial reductions in trade-distorting
domestic support.’ The DDA also mandated the
establishment of new modalities for further commitments.

What was labelled by some as a development
agenda, in fact turned out to be nothing more than a
continuation of the WTO’s liberalisation agenda.
The draft documents on new modalities were
circulated from February to March 2003 by the WTO’s
Agriculture Committee, which was headed at that time
by Stuart Harbinson. The ‘Harbinson document’ as the
text came to be known was a highly bracketed (9)
document that pushed for further market concessions
– with tariff cuts ranging from a low of 25 % to a high
of 60 % reductions - and the retention of domestic
subsidies in the North in the form of blue and amber
box supports.

The 13 September 2003 draft text on agriculture
was heavily criticized during the 5^th WTO Ministerial
Meeting in Cancun. Focus on the Global South
called for the rejection of the draft text for it “[the text]
does not redress the existing imbalances in the
agriculture agreement. There is no attempt to reduce
domestic supports and export subsidies, as called for
by the majority of developing countries and also no
attempt has been made to address concerns of small
farmers. In fact, it will increase these imbalances since
it very clearly allows developed countries to continue
their subsidies and dumping, even as developing
countries are asked to take on drastic tariff cuts!” (10)
The Ministerial Meeting in Cancun collapsed
with no agreements on key areas of negotiations
including agriculture, non-agricultural market access
(NAMA - see the relevant section of this Guide for
further details) and the new issues.

Revival through the July framework

The Doha round negotiations however were quickly
revived with the forging of an agreement on a framework
for the negotiations at the General Council
Meeting in Geneva in the last week of July 2004. The
negotiations that produced Annex A of the so-called
‘July Framework’ for agriculture were held only among
a small group of five countries (Five Interested Parties
or FIPS) which included the US, EU, Australia and two
of the most influential members of the Group of 20
(G20) - Brazil and India.

The second draft of the framework was written
by Tim Grosser the chairperson of the Committee on
Agriculture based on the FIPS discussions. The
second draft was then discussed by a group of around
20 countries in a green room process. (11) The outcome
was a draft endorsed by the 20 countries. This draft
was then presented to the other WTO members. With
endorsement already secured from the major players,
there was intense pressure for all members to agree to
the July Framework’s terms.

What’s wrong with the new proposal?

The framework for the agriculture negotiations will
remain focused on the three pillars - market access,
domestic support, and export competition despite the
many issues and problems that have arisen since
Doha, and the collapse of the WTO Ministerial
Meeting in Cancun in September 2003. These much
broader concerns include dumping, declining commodity
prices, food security, livelihoods, and rural development.
WTO orthodoxy is that all of these (pillars) must
be cut - despite a decade of evidence that the model
of agricultural ‘liberalization’ supported by these
“pillars” has been disastrous for farmers and rural
development everywhere. (12)

Despite the Special and Differential
Treatment (S&D) rhetoric in the Doha Declaration,
the AoA remains one of the most iniquitous agreements
in the WTO, in effect providing special and
differential treatment to developed countries rather
than developing countries. The promised benefits from
agricultural liberalization and subsidy reduction in the
OECD countries under AoA have not been fulfilled. (13)

A number of issues put forward by developing
countries on inter-linkage mechanisms (to allow
flexibilities for adjustments on tariff levels as a means
of protection against subsidized imports), cotton, and
special products (to protect food security, livelihood
security and rural development) among others have
been included in the framework. The inclusion of these
sections is an attempt on the part of the WTO Agriculture
Committee to reflect the demands made by
developing countries in negotiations prior to Cancun.

Like many other demands from developing countries
however, the sections which would potentially favour
developing countries remain vague and without any
detail on clear commitments or ways to move forward.

On market access the objective of the
negotiations is to realize substantial improvements in
market access based on the following principles: [1]
tariff reductions will be made from bound rates, [2]
each member (other than LDCs) will make a contribution,
and [3] progressivity in tariff reductions will be
achieved through deeper cuts in higher tariffs with
flexibilities for sensitive products. Substantial improvements
in market access (meaning tariff reductions) will
apply to all products. (14)

The framework mandates the use of a single
tiered formula approach for market access, but in
different bands. Tariff reductions would have to be
applied on the bound rates (something to benefit the
rich nations). Many of the issues about the number of
bands, percentage cuts for each bands, and tariff caps
remain under negotiation.

Like many other provisions in the framework, the
one on sensitive products will hurt developing
country interests twice over. First, the text recognizes
and gives a go-ahead signal for developed countries
to protect “sensitive products”, meaning rich nations
would also be given the flexibility to protect some
products that are deemed sensitive while calling for
tariff quota expansion and tariff reduction on all other
products including products of interest to developing
countries

In the area of Special Products for developing
countries, there are no details given, which the SP
group have been calling for - such as self-selection on
the basis of stated criteria and no tariff reduction. This
discussion has evolved over 7 years - from the
development box (positive list) to the negative list
approach, to strategic products and now Special
Products. The original recommendations have been
diluted each step of the way. Developing countries
have shown great flexibility in their proposals regarding
Special Products, but to date have not received
anything in return. (15)

On domestic support, the section at first
glance appears positive in favor of realizing substantial
reductions in the huge trade distorting domestic
support provided by developed countries to their
agriculture (16). But what this tiered formula actually
does is:
– expand the definition and scope of blue box
subsidies; and
– redefine the overall base of all trade distorting
domestic support - to include the Final Bound Total
AMS, the permitted de minimis level, and the level
agreed for Blue Box payments-upon which
reductions will be based.

Furthermore, the text actually forces developing
countries to reduce their de minimis levels of support
which now stands at 10 percent of total agricultural
output.

The expansion of the Blue Box category legitimizes
the box-shifting tactics of the United States
(US). The US has been demanding an amendment to
the blue box provision to allow it to continue its
counter-cyclical payments to its farmers under the
notorious US Farm Bill of 2002. This redefinition will
allow the US to shift some $9-10 billion from the Amber
Box to the Blue Box.

Since the US has currently no subsidies in the
Blue Box, the agreement thus gave the nod for the US
to now provide support under the Blue Box to levels
up to 5 % of agricultural production value of period to
be established. The EU makes significant use of the
blue box subsidies (17), above the proposed 5% limit, but
has already planned to transfer a large part of these to
the Green Box, and therefore should be able to meet
the target without effectively reducing the level of
support it provides to its farmers. (18)

Far from moving towards substantial reduction
of subsidies, the framework actually provides a
cushion to the US and EU to raise farm subsidies from
the existing level.

On export subsidies, the section does not
prescribe clear end dates for elimination of these
subsidies. The framework prescribes only that
commitments and disciplines will be implemented
according to a schedule and modalities to be agreed. It
goes on to state further that commitments will be
implemented by annual instalments with equivalent
and parallel commitments by Members.

Negotiations update

In agriculture, which clearly remains the key area of
negotiations and on which progress on negotiations in
the other areas are hinged, the debate is over the level
of ambition of proposed tariff reduction formulas and
clear schedules for the elimination of domestic support
and export subsidies.

October 2005 witnessed a series of proposals
submitted by the US, EU, G20, G33, ACP countries
before and after the General Council in Geneva to
speed up the AoA negotiations. However the US and
EU have made their offers conditional on the progress
in liberalisation of manufacturing and services sectors.
In exchange for its trivial offers in agriculture, they
have placed extremely heavy demands on developing
countries to open up their markets under industrial
tariff and services.

This would be contrary to the Doha round, and
of significant concern to developing countries who
maintain that these negotiations should remain
separate.

On the tariff reduction formula, the US is
pushing for a more ambitious formula that would
“harmonize’ tariff rates among countries. This harmonizing
formula or the simple Swiss formula would deal
deeper cuts to products with higher tariffs. This could
be disastrous for developing countries with high
tariffs, as the formula would require more drastic
reductions to their level of protection. The EU on the
other hand wants a less ambitious “Uruguay Round”
type formula where tariff rates are categorized into
bands and percentage cuts are prescribed per band.

A proposal from the G20 however is now being
touted as the compromise formula and the starting
point for continued negotiations. The G20 proposal
incorporates the “banded” approach of a Uruguaytype
formula with the ‘harmonizing’ effect of a simple
Swiss formula by subjecting products in the higher
bands, meaning those with higher initial tariffs, to
higher cuts than those in the lower bands. Tariff caps
would also be imposed to address the issue of tariff
peaks, so that no tariffs would be higher than 150 per
cent for developing countries and 100 per cent for
developed countries. The G20 compromise formula
however would undermine the interest of many
developing countries that still maintain relatively high
tariffs and countries that maintain a uniform tariff
structure for most if not all of its products. The
banded approach would force these countries to
drastically and uniformly reduce all their tariffs.

With the removal of QRs and protection of
special safeguard mechanisms not available to every
developing country, a further reduction and binding of
tariff at the lower rate would be detrimental to the
agricultural based economies of the developing
countries like India.

On the areas of Special Products and the
Special Safeguards Mechanism, which are of
interest to developing countries, the G33 (see the GGuide)
is calling for greater flexibilities for developing
countries in the name of rural development, livelihoods
and food security. There are however unrelenting
efforts on the part of developed countries to limit the
scope and effectiveness of any SP/SSM provisions.
On 1^st November 2005, the G33 warned the Chair of
the WTO General Council Ambassador Amina
Mohamed of Kenya, the WTO Director-General Pascal
Lamy and the Chair of the agriculture negotiations
Ambassador Crawford Falconer of New Zealand that
for the G33, “it would be difficult to agree on any text
where the issues of SP and SSM are not given the
same level of specificity as others in the market access
pillar.”

The negotiations on the elimination of domestic
support have barely moved at all, with the US remaining
firm on maintaining its huge subsidies to its
farmers contained in the US Farm Bill of 2002.
While there remains no clear timetable for the
elimination of export subsidies, the EU has hinted of a
possible date for the phase-out of its export subsidies.
The EU’s announcement of this possible date might
just cause movements in the other pillars of the
agreement.

In short, while the negotiations for a new
agreement on agriculture appear to be stalled at the
moment, the possibilities for movement and therefore
another lopsided agreement in favor of developed
countries before or during Hong Kong remain firmly on
the table.

In view of the plethora of proposals on Agriculture,
it is extremely important for the developing
countries to evaluate them with great care. They
should not let this exercise turn into a mutual forgiveness
between US and EU for extraction of concessions
from them in industrial tariff and services. The developing
countries must do their best to protect the food
sovereignty of their people and interest of their farmers
in the forthcoming negotiations at the 6^th Ministerial in
Hong Kong in December 2005.

As aptly put by a leading farmer leader of the Via
Campasina from India, Chukki Nanjundaswami who
demand the removal of agriculture from the purview of
the WTO because ‘agriculture is too important to leave
it at the mercy of rich nations’. (19)

DERAILING the AOA

Focus on the Global South’s strategy is to derail
the WTO by actively preventing consensus in WTO
negotiations. The aim of the Derailer’s section is to
highlight where there is that lack of consensus and to
suggest ideas and strategies for promoting disaccord
among WTO country members.

How do we prevent consensus in agriculture?

To prevent consensus we should continue to exert
pressure on the most vulnerable points or the cracks in
the negotiations. In agriculture the critical issues to
exploit are the formula for tariff reduction, the modalities
and timeframes for the elimination of domestic
support and export subsidies. including the controversial
blue box expansion, and sensitive issues like
cotton.

PRESSURE POINTS

1. The US-EU disagreement on
subsidies and tariff reduction

The EU and US have unveiled their WTO “offers” with
much fanfare. It looked as if huge concessions to the
developing world had been made. In reality, the same
game of box shifting and creative accounting, as was
the result of the Uruguay Round, has once again been
reproduced, only this time, with a much higher price
demanded of developing countries. (20)

The US proposal has prompted a response from
the EU that has caused quite a stir among Members of
the European Union. France has threatened a veto on
further concessions on tariff and subsidy reductions
which would have an impact on their farming sector.
Peter Mandelson, the EU Trade Commissioner has
been put in the hot seat with France questioning
whether the “final offer” that he made on behalf of the
EU to reduce farm tariffs by 60 % and eliminate farm
subsidies is too much and whether he has the authority
to make such an offer.

We should:
- highlight the reality that these proposed cuts are
“paper cuts” amounting to no substantial reduction
of EU or US subsidies. It may in fact result in
expansion of support.
– expose the expansion of the blue box and the box
shifting strategy of the US as part of their squid
tactics to skirt around commitments to reduce
subsidies.
– draw attention to the fact that there are still no
restrictions on the use of the Green Box despite
recent rulings in the WTO (like the cotton case) that
certain subsidies under the green box are in fact
trade distorting.
– highlight that these “paper cuts” touted as “bold
moves” on the part of the US and EU in order to
“save the round” would in fact perpetuate dumping.

2. Developing countries who would
pay dearly for further tariff reductions

Whilst effectively nothing is being offered by those
that most distort agricultural trade, the US and EU are
attempting to use this occasion to extract yet more
market access openings from the developing world. A
minority of developing countries will stand to benefit
(the corporate farmers in a small number of countries)
from new market access openings, but the majority of
the developing world will not. (21).

We should:
- draw attention to the possible effects of further
tariff reduction on the lives of the most vulnerable
sectors in these countries.
– plug in the numbers to show what the proposed
formula would mean to local farmers and come up
with case studies showing the impact of further
tariff concessions.
– highlight the plight of small farmers in those
countries whose livelihoods have already been
devastated under a liberalized regime - such as in
the Philippines, Thailand, and Indonesia which
have already relatively low agricultural tariffs.

The debate over the level of ambition of a new
tariff formula misses the whole demand of farmers
through out the developing world for greater support
and protection. What farmers in these countries need
is a respite from tariff reduction. Arguing over a new
formula is tantamount to asking whether we want a
slow or a quick and sudden death for farmers. (22)

3. Maximum Demands
on Special Products

The engagement with the G33 on the issue of Special
Products (SP) should be based on a maximum demand
for protection of agriculture in developing countries
on the basis of food security, rural development and
livelihood concerns. The flexibilities under the SP/
SSM provision should include exemption for further
tariff cuts, the right to impose additional duties against
subsidized imports and the right to re-instate quantitative
restrictions on certain products.

We should:
– continue to put pressure on goverments within the
G33 to ward off attempts by the developed countries
to reduce the scope and effectiveness of SP/
SSM. Key countries here include Indonesia and the
Philippines.
– keep up the pressure on their negotiators to
oppose a new deal that would undermine food
security, rural development and livelihoods.

Notes

(1) All words in bold are defined in the Glossary included at the end of this Guide.

(2) Bello, Walden and Kwa, Aileen, ‘Guide to the Agreement on Agriculture: Technicalities and Trade Tricks Explained’,, Focus on the Global South, 1998.

(3) TRQs and MAVs are based on a percentage of volume of consumption for the base year of 1986-88. MAV is a
commitment to allow importation at a lower tariff rate called “in-quota tariff”.
For developed countries this level can be up to 5
% of the value of production for both individual
products (product specific) and 5 % of the value of
total agricultural production (non-product specific).
For developing countries, support of up to 10 % is
allowed in both categories.

(4) Oxfam International, A Round for Free, How rich countries are getting a free round on agricultural subsidies at the WTO,
June 2005, page 3, accessed at www.maketradefair.com

(5) As quoted in the Practical Guide to the WTO for Human Rights Advocates, 3D and FORUM-ASIA, 2004, page 62.

(6) Statistics from the Director General of Commercial Intelligence & Statistics, Ministry of Commerce, India.

(7) The coconut price collapsed from Rs. 6 per piece in 1999 to Rs. 2 in Jan 2001. Similarly the price of coffee is down from
Rs. 68/kg to Rs. 26/kg.

(8) One crore is10 million.

(9) In WTO negotiations, the number of brackets in a document indicates the level of disagreement between negotiators.

(10) Focus On The Global South: Call On Governments to Reject Agriculture Text, September 2003 Press Release.

(11) A green room process refers to informal discussions among a select number of WTO members. Such processes have
been criticised because they are exclusionary (particularly towards developing countries) and unaccountable.

(12) Murphy, S. A “Truly Historic” Trade Agreement: Analysis of the Institute of Agriculture and Trade Policy. August 2004.

(13) Fatoumata J. and Kwa A. (2003) Behind the Scenes at the WTO: The real world of international trade negotiations,
London: Zed Books. Pp 26-27.

(14) Raghavan C. Agriculture Annex contrary to some understanding. South North Development Monitor (SUNS #5627)
August 2004.

(15) Kwa. Aileen. WTO Vehicle: A Catastrophe for Development. 30 July 2004

(16) Estimated at around $320 billion.

(17) The EU has Blue Box subsidies amounting to Euro 14.31 billion.

(18) Khor, M. Preliminary comments on the WTO’s Geneva July Decision. Third World Network.

(19) Said at a massive protest by farmers in Mumbai (India) on 2^nd October 2005 (Remove agriculture from WTO’s
purview’, Hindustan Times, 3^rd October 2005).

(20) Kwa, Aileen. ‘Analysis of US and EU Packages: No concessions, but high price demanded of developing countries’,
Focus on the Global South, 16 October 2005.

(21) Kwa, Aileen, ‘Analysis of US and EU Packages: No concessions, but high price demanded of developing countries’,
Focus on the Global South, 16 October 2005.

(22) Purugganan, J., ‘Philippines Cannot Afford A New Deal’, paper presented before the Philippine Congress, Focus on the
Global South, 31 August 2005.

The Derailer’s Guide to the WTO: Section 3, Part 2

 Ratcheting up the Pressure in Services General Agreement on Trade in Services (GATS)

What is the GATS?

The World Trade Organisation (WTO) describes the
General Agreement on Trade in Services (GATS) (1) as
‘perhaps the most important single development in
the multilateral trading system since the GATT1 itself
came into effect in 1948’. The GATS is one of 18
agreements that fall within its ambit.

The focus of the GATS is on the liberalisation
and deregulation of the services sector. The scope of
what is defined as services is deep; over 160 services
sectors fall under its jurisdiction.

Almost no service sector is excluded. It includes
basic services such as water, education and health. It
also covers infrastructure services such as energy,
transport and telecommunications. Critical sectors
such as finance fall within its ambit. The world’s
largest industry - travel and tourism - is also included
under GATS. These sectors represent the era of deep
liberalisation and the next frontier for corporate-led
globalisation. The subject matter of GATS is incredibly
broad as there is yet no consensus on its coverage.
According to David Hartridge, Former Director
of Services Division of the WTO, ‘the push to include
services within its framework is the result of pressure
and lobbying efforts by the US financial services
sector’.

The aim of the GATS is to promote unrestricted
trade in all types of services and to remove all forms of
governmental intervention that may be viewed as
“trade restrictive.”

The GATS identifies four modes (or types) of
supply of a service: Mode 1: Cross Border Supply
(where the service is supplied remotely from one
country to another).Example: Citibank customers in the
US get service help from a call center based in the
Philippines. Mode 2: Consumption Abroad (movement
of individuals to a country to consume a
service).Example: Tourists traveling overseas or
patients taking advantage of cheap health-care
abroad. Mode 3: Commercial Presence (where a
foreign company sets up a subsidiary or branch within
another country in order to deliver the service
locally).Example: Foreign Direct Investment in banks,
hospitals and power plants. Mode 4: Presence of
Natural Persons (where individuals travel to another
country to supply a service there on a temporary
basis).Example: Software programmers, nurses or
doctors working in another country. This is different
from immigration because GATS explicitly deals only
with temporary movement.

GATS has been promoted as a “bottom-up”
treaty rather than a “top-down” treaty since in theory
it allows governments to select which sectors they will
open up and when. This is called the request-offer
model, whereby WTO Member governments can
submit requests on which service sectors they want
another country to open up and in the offers, a
government can list which service sectors they choose
to liberalize. This model of negotiations is currently
under threat, with proposals from developed countries
requiring all countries, including developing countries,
to open a minimum number of services sectors and to a
minimum extent (see below for further details).

What does GATS mean
for developing countries?

Once a country agrees to liberalize a service sector
under the GATS, it has certain obligations from which
they cannot deviate:

1) National treatment. Once a country has fully
committed a sector to liberalisation under the GATS, it
is prohibited from discriminating against foreign
companies and corporations that provide services in
that sector, even if such services are currently provided
domestically by public or private means.

National treatment is an extremely important commitment
in the GATS and addresses qualitative restrictions
that a government may place on service provision
in a committed sector. Concretely, this means that
governments cannot set performance requirements
specifically for foreign companies. This includes, for
example, domestic environmental or labour laws,
quality standards, obligations to hire and train local
staff, or requirements to build local/domestic capacity
in their particular areas of operation. Nor are they
required to source raw materials, goods or support
services domestically.

2) Market Access. Market access rules cover all
quantitative limits on services, whether they apply to
foreign or domestic firms. They also provide opportunities
for foreign firms to challenge domestic regulation
if these regulations are perceived as restricting the
entry of firms into domestic markets. Once a government
has committed a sector to full liberalisation, it
must provide foreign corporations access to domestic
markets through “least trade restrictive” business and
investment policies.

3) Most Favoured Nation (MFN) Status. Host
governments must provide equal market access to all
trading partners in a service sector that has been
opened up - i.e., they must provide Most Favoured
Nation (MFN) status to all WTO members. This means
that the national treatment must be applied “horizontally,”
or across the board to service providers of all
WTO member countries. Host governments cannot
choose which foreign entities get national treatment
and which do not. Governments then, lose their rights
to develop preferential trading arrangements for social
or political reasons, or to enter into special service
agreements with regional partners.

What’s wrong with the GATS?

The GATS has proven to be one of the most controversial
of the WTO agreements and going through it
shows the many dangers that it poses to people of
both the developing and developed world if fully
implemented.

1.) What was once public becomes private:

The GATS threatens public services including health,
education and water. The agreement opens up these
sectors to transnational corporations and accelerates
the process of privatizing essential public services,
thereby limiting access to services to only those who
can afford them. There are many examples of how
privatization has resulted in excluding the poor from
essential services. For example in Cochabamba,
Bolivia, the World Bank encouraged privatization of
water which resulted in water prices reaching $20 per
month, compared to the minimum average wage of
$100 per month. (2)

Public services and the so-called ‘commons’
including water, education, health care, social welfare
and energy, should not be subject to multilateral
liberalisation or privatization.

2.) Loss of national control: Because of the
national treatment clause, governments are prevented
from exercising national regulation especially on
foreign direct investment. In some cases, governments
would have to rewrite their constitutions in order to
adhere to this. For example, the Philippines has a 60-40
regulation, which requires at least 60 percent of a
foreign company to be owned by a Filipino and a
maximum of 40 percent to be owned by a foreigner.
This will no longer be allowed under the national
treatment clause of the GATS.

3.) Investment Rules: The WTO calls the GATS the
world’s first multilateral agreement on investment,
since it includes the right to set up Commercial
Presence (Mode 3 in GATS language) in another
country. The National Treatment clause prohibits
WTO members from treating foreign investors less
favourably than domestic service suppliers. The
clause on market access ensures effective market entry
provisions. Once countries make binding commitments
under these two clauses, GATS rules can reduce the
ability of countries to use policies that ensure equity
ceilings, obligations on technology transfer, universal
services provision (legislation that obliges private
providers in basic services such as health, education,
water to supply services to marginalised sections of
the community) and employment of local labour. The
GATS framework maximises investor rights at the cost
of development.

4) Locking bad policies into place: A government
cannot reverse a commitment made under the
GATS even if it proves detrimental to its national
economy. Developing countries are already grappling
with the adverse impacts of privatisation.

Take the example of Telecommunications in
India. India reoriented its Telecom policy in 1994 and
argued that liberalisation and private participation
would provide the additional resources for connecting
all its villages by 1997. More than 10 years after this
there are nearly 70,000 villages without telephones.
The rural - urban divide is growing with a dismal
teledensity of less than 2 phones per 100 in rural areas.

The private players have provided only about 14,000
Village Public Telephones and met only about 10 per
cent of their license commitments. The benefits of
liberalisation have been concentrated in big cities and
larger towns - which is only 20 percent of the country.
If the Indian government wants to provide rural
telephony it must strengthen the public provider and
improve regulations that force private providers to
adhere to social obligations.

Binding commitments under national treatment
and market access will not allow the Indian government
to use such policy mechanisms.

From Doha to now

The Doha Ministerial was responsible for fast-tracking
the GATS negotiations. The Doha Declaration set
dates for when the request phase of negotiations
would commence and when the offers phase would
start. To date, 92 of 148 member countries have already
submitted offers in the GATS, while all developed
countries have made offers.

Developed countries are fast overhauling this
request-offer framework, which offers some degree of
flexibility to developing countries. Developed countries,
led by the European Union (EU), are now
proposing a “benchmark” approach to speed up the
negotiations.

This new approach aims to identify 10 key
sectors in the GATS, from which developing countries
will be asked to choose 6-7 sectors in which they must
make minimum commitments on. The EU is also
demanding that countries bind sectors already
liberalized through autonomous national policy or
under structural adjustment policies of the International
Monetary Fund (IMF). This means that these
levels of liberalisation outside of the GATS will
automatically come under GATS rules in the future.

These new proposals, also called “complementary
approaches” have been met with tremendous
opposition from developing countries because they:
– Remove the flexibilities originally available under
the request-offer framework;
– Require all developing countries, including Least
Developed Countries (LDCs), even if their economies
are not ready, to commit a significant number
of commercially-important sectors to liberalization
and to deepen these commitments by removing
restrictions on market access and national treatment;
and,
– Are one-sided as they largely focus on Mode 3
(commercial presence) where corporations have an
interest, asking for a minimum of 51% foreign
ownership.
- The new proposals sideline developing countries’
demands on operationalising the mandated
assessment of the GATS before they are asked to
further open up.

Like all WTO agreements, GATS is being
negotiated with little public oversight. The conclusion
of these negotiations in favour of multinational
corporate interests will mean the death knell for public
services. The entire GATS package is serious setback
to public participation and democratic oversight in the
formulation of national policies, laws and regulations.

DERAILING GATS

Focus on the Global South’s strategy is to derail
the WTO by actively preventing consensus in WTO
negotiations. The aim of the Derailer’s section is to
highlight where there is that lack of consensus and to
suggest ideas and strategies for promoting disaccord
among WTO country members.

In the run-up to Hong Kong we should:
– Call for an immediate halt to market access talks
under the GATS;
– Unequivocally oppose all proposals for
“benchmarking” or “complementary approaches”
to services liberalisation;
– Reject the Mode 4 approach of some countries
such as India that are focused on the movement of
only skilled labour; and
– Demand a comprehensive assessment of the impact
of past liberalisation and privatisation of services.

Notes

(1) All words in bold are defined in the Glossary included at the end of this Guide.

(2) As a result of massive protests and public outcry, water was eventually restored to public ownership. Vandana Shiva, Water Wars: Privatization, Pollution and Profit, New Delhi, India, Research Press, 2002.

The Derailer’s Guide to the WTO: Section 3, Part 3

 NAMA and the Spectre of De-industrialisation

Non-Agricultural Market Access (NAMA

What is NAMA?

NAMA refers to non-agricultural market access. As its
name suggests, it is a proposal for an agreement under
the World Trade Organisation (1) (WTO) regime that
covers non-agricultural products, or all products
outside the Agreement on Agriculture (AoA).
The objective of the negotiations is greater
market access in non-agricultural products. That is,
non-agricultural products should be freely traded
without (or with very limited) tariffs, quotas or other
importing/exporting restrictions.

Unlike the AoA which has three pillars -market
access, domestic support and export subsidies,
NAMA’s sole objective is market access.
In WTO language, market access revolves
around the issue of tariffs - the reduction and elimination
of tariffs, tariff peaks, and the prevention of
tariff escalation as well as bound tariff rates.

NAMA is an agreement for binding and reduction
of tariffs not just on industrial products but on
products like fish and fishery products, shoes, toys,
jewellery and almost anything outside the ambit of the
AoA. The significance of this agreement lies in the
scope of products and sectors that fall within its terms.
Many of these are of vital importance to the development
of developing countries and the livelihoods of
their populations.

Denied the ability to protect their emerging
industrial sectors, there are grave concerns that
developing countries will be lead down a path of deindustrialisation.
This is because any existing domestic
industries will be unable to compete with industrial
products likely to flood their markets as a result of
liberalisation. NAMA would further reduce the
development options for developing countries as it
would undermine their already limited capacity to
develop their industrial base.

NAMA and the July Framework

At the Cancun WTO Ministerial in 2003, a draft text
called the ‘Derbez Text’ (2) with provisions for tariff
binding and tariff reduction for NAMA was rejected
by member countries.

Despite the rejection of the Derbez Text at
Cancun, negotiations were resurrected through the
July Framework (3) in July 2004. The July Framework
defines the parameters for establishing modalities in
market access for non-agricultural products. It has
been criticized for resurecting the major elements of
the Derbez Text.

What are the elements of NAMA
under the July Framework?

1. Coverage. The July Framework provides for 100
% coverage with no a priori exclusion. This comprehensive
coverage means that there is no possibility of
exemptions similar to the provisions in the Agreement
on Agriculture (AoA). As a result of NAMA, it is
expected that developing countries will be unable to
protect domestic industries crucial to their own
development.

2. Tariff Reduction Formula. Based on the July
Framework, tariff reduction shall commence from
bound rates after full implementation of current
concessions. The formula for tariff reduction is likely
to be the non-linear Swiss style approach so that
developing countries which have higher tariffs will be
required to make proportionately greater cuts.

3. Tariff Binding Formula. For unbound tariffs, the
basis for tariff reduction shall be (2) times the MFN
applied rate in the base year defined as 2001. This would
require all countries to bind their remaining unbound
tariff lines according to the agreed-upon formula.

Why is NAMA problematic for
developing countries?

1. The Derbez text was already rejected. The
July Framework resurrects the Derbez Text, which was
already rejected by majority of the WTO-member
countries in Cancun. Once again, the position of
developing countries has been sidelined by the
interests of the richer industrialised nations.

2. An obligation to cut tariffs across the board.
It locks-in countries to tariff structures that would be
difficult to change in the future. Some say the
obligations would be irreversible. For developing
countries this would mean closing the doors on the
use of tariff policy and the protection of key industries
as an integral part of a development strategy.

3. De-industrialistaion. Policy space for protection,
which allowed developed countries to achieve
industrialization at the turn of the 19^th and 20^th
centuries, is now being closed to developing countries.
This could be disastrous for developing countries,
who in the absence of a growing industrial
sector, will be forced to continue to rely solely upon
their agricultural sectors. It is feared that the deindustrialisation
process which began under structural
adjustment programs will accelerate under NAMA.

4. Drastic tariff cuts. They would bring industrial
tariffs to the lowest levels since the 19^th and early 20^th
century. Also the harmonization of tariffs between
industrial and developing countries is anchored on the
principle of full reciprocity - that is that tariff reductions
should be undertaken by developed and
developing countries alike. This is contrary to the
principle of Special and Differential Treatment.

5. NAMA requires the binding of previously
unbound tariff lines. On tariff bindings, compared to
agriculture where almost all products were bound under
the AoA with few exemptions, not all non-agricultural
products were bound under the GATT-Uruguay Round.
A considerable percentage of products and tariff lines
remain unbound. The July Framework would force
countries to bind these products.

For countries like the Philippines, whose average
applied non-agricultural tariffs amount to a mere 4.3 %,
tariff binding in fact is a critical issue. The Philippines for
example would be forced to now bind more than 39 % of
its products previously outside the ambit of the WTO.
This would include 95% of tariff lines for fisheries that
are still unbound.

Binding of remaining tariff lines now would be
tantamount to closing the door to any prospects for
industrialization in the future.

6. The inclusion of fisheries. The fisheries sector
is considered an economically important yet sensitive
sector in many developing countries. It is a sector that
provides livelihoods to millions of small fishers.
Across the globe however, small fishers remain one of
the poorest sectors.

In the Philippines for example, tariff rates on
fisheries are already quite low owing to previous
unilateral liberalization of the sector. Following the
proposed formula in NAMA would force the country
to bind fish and fishery products at rates no higher
than 20 %. A level of tariff protection that many in the
sector argue is not enough to address the many
threats facing the sector.

Furthermore, the main issue for fishers is not
market access but protection of their livelihoods that
are constantly under threat from tremendous pressures
on the resource base and the lack of government
support.

Market access would further aggravate the bias
of government in favor of export-oriented sub-sectors
like aquaculture over the interest of small fishers.

Where do country groupings
stand on NAMA?

– Developed countries like the US, EU and Korea are
pushing for NAMA.
– Other developing countries like Kenya, Nigeria,
Egypt, and Indonesia oppose NAMA.
– Argentina, Brazil and India (ABI) have proposed
a less ambitious formula for tariff reduction.
– Least Developed Countries (LDCs), although
exempt from making any commitments, have opposed
NAMA on the grounds of erosion of preferences.

In general, it appears though that developed
countries are united in NAMA while developing
countries are still divided on the issue. The devil,
however is in the detail (see below).

What is the current status
of negotiations?

Apart from agriculture, NAMA could be the possible
deal maker or deal breaker of the Hong Kong Ministerial.
At this stage, there remains major disagreements
within member countries on NAMA, particularly on
the formula for tariff reduction and binding:

1) Divergence of views on the July Framework.
Developing countries site paragraph 1 of Annex
B of the July Framework which states that the content
of the agreement is still subject to negotiations and
that no agreement on the formulas prescribed in Annex
B has yet been reached. Hence, they refrain from using
the exact language in Annex B so as not to establish a
language norm which will be used in future negotiations.

Developed countries on the other hand are
liberal in using the language and proceeding as if
NAMA is already a done deal. The reference to
paragraph 1 is where the proposal of Argentina, Brazil
and India (known as ABI proposal) is coming from.

2) Conversion of complex tariffs into their ad
valorem equivalents (AVES). The majority of the
member countries already use the ad valorem tariff
system with the exception of countries in the European
Union which maintains complex tariffs. There is a need
to convert these complex tariffs into their ad valorem
equivalents in order for the tariff reduction formula to
apply.

3) Differing positions on the tariff reduction
formula. There are countries like US and EU that are
aggressively pushing NAMA who want a Swiss
Formula for tariff reduction (also see glossary for
further details on tariff reduction formulas). This is an
ambitious formula that would effect bigger cuts to
higher tariffs. Countries like Argentina, Brazil, and
India (ABI) on the other hand have proposed a less
ambitious ‘Swiss-type’ formula applied line by line to
countries’ bound rates which considers average tariff
rates as part of the formula in the name of greater
flexibilities for developing countries. The ABI proposal
is for different rates of tariff reduction for developed
and developing countries in accordance to the
principle of “less than full reciprocity” and special
and differential treatment.

The US and EU criticize the tariff reduction
formula proposed by ABI as not being ambitious
enough and in fact ‘a step backward’ from the NAMA
mandate. The US also argued that getting rid of high
tariffs and tariff peaks is expected to be done by all
members and not just developed countries.

While the negotiations appear to have been
marked major disagreements there are also disturbing
signs, however, of a convergence occurring:
- Despite much initial grumbling after the July
Framework deal, the developing countries have
accepted the “Derbez text”, which they rejected in
Cancun, as the basis of negotiations, as proposed by
the Framework;
- There is now consensus on a non-linear Swiss or
Swiss-like formula for tariff reduction, which would
apply to all products and subject higher tariffs to
greater proportional cuts than lower tariffs, thus
disadvantaging many developing countries, which
maintain relatively higher tariffs on many key industrial
goods than developed countries.
– A Uruguay Round formula, which would stipulate
an average tariff cut across industry but leave it up to
national authorities to determine the rate for particular
products, is not even in discussion, although it is
favoured by most developing countries. (4)

The so-called Pakistani compromise

The latest formula to emerge is the so-called Pakistani
“compromise” which would factor into the formula the
average bound tariff rate, then run a coefficient of six
for developed countries and 30 for developing
countries. This would, according to the Pakistani
proponents, significantly bring down product tariffs
for everybody (a developed country concern),
harmonize tariffs within each grouping (a WTO
objective), and still preserve at least some of the
difference in average tariff levels between the developed
and developing country groupings (a developing
country concern).

It is likely that the Pakistani proposal - which
nobody rejected outright although some developing
countries were appalled - or a version of it will become
the basis of the NAMA talks when they resume.

It was more than just spin when US Deputy
Trade Representative Peter Allgeier issued the
following upbeat statement on July 28: ‘The path
ahead on NAMA is much clearer, given the work that
has been done in the past several weeks...Several
constructive ideas are on the table. There have been
signals of flexibility from all sides about finding the
right formula and the use of coefficients to realize real
market access opportunities.’ (5)

DERAILING NAMA

Focus on the Global South’s strategy is to derail
the WTO by actively preventing consensus in WTO
negotiations. The aim of the Derailer’s section is to
highlight where there is that lack of consensus and to
suggest ideas and strategies for promoting disaccord among WTO country members.

The NAMA negotiations are now racing to meet
the objective to come up with “full modalities” by
Hong Kong. Full modalities means that final figures are
plugged into the formula already. “This is number
crunching time; no numbers by Hong Kong would
make it highly unlikely for us to conclude the Round
as desired,” according to Ambassador Stefan
Johanesson, the Chair of the NAMA Committee. (6)

The priorities according to the NAMA chair are
defining formula flexibilities and the getting consensus
over the issue of unbound tariffs based on a number
of proposals on the table which include the mark-up
approach of Canada, the ABI proposal and the
proposal from Pakistan.

We should:
– Expose the consequences of developing countries
absorbing tariff cuts to their industries, as is required
under current proposals. As country negotiators are
now grappling with the numbers, campaigners should
also be ‘plugging- in’ the numbers based on the
proposals on the table. This should strengthen our
argument against further liberalization especially of
important and sensitive industries and sectors. (7)
– Exert pressure on countries with a substantial
percentage of unbound tariffs to refuse binding of
their unbound tariff lines on the basis that binding
would further restrict policy space in using tariffs as a
tool for industrialization and development.
– Dramatize the plight of small fishers and how
NAMA would aggravate their already impoverished
conditions. We should continue to work with fishers
groups around the world to amplify their voice in
opposition to liberalization of the fisheries sector and
their demand for WTO to get out of fisheries.
– Sensitize industry groups, thereby broadening the
base of opposition to NAMA to include industries and
sectors that would have to face the entry of cheaper
imports, as well as trade unions.

Notes

(1) All words in bold are defined in the Glossary included at the end of this Guide.

(2) The text was named after the Chair of the Cancun Conference, Mexican Foreign Minister Luis Ernesto Derbez.

(3) Annex B of the July Framework sets out the details for NAMA.

(4) Bello, Walden. Are the WTO Talks in Trouble? Don’t Bet On It. Focus on the Global South. August 2005

(5) Ibid

(6) Statement made by Ambassador Stefan Johanneson at the Lobby Meeting with civil society in Geneva on 17 October 2005.

(7) The latest and thus far most ambitious proposal from the EU to have a coefficient of 15 for developing countries and 5 for developed countries would be a good basis to make the projections on future tariff cuts.

The Derailer’s Guide to the WTO: Section 4

 With a little help from its friends...

How the WTO completes its stranglehold on
global and national policy making

The World Bank (the Bank), International Monetary
Fund (the Fund) and the World Trade Organisation
(WTO) are three faces of a powerful international
system that is increasingly dominating national and
global policy making, at the cost of the well-being and
livelihoods of the majority of the world’s peoples.
Their operating ideology is neo-liberal (1) and their
driving interests are corporate.

The Bank and Fund have played significant
roles in weakening policy autonomy and dismantling
domestic self-sufficiency in the developing countries
that borrow from them. Their infamous structural
adjustment programmes - now called Poverty
Reduction and Strategy Papers (PRSPs) - have
created and entrenched policy induced poverty
across the developing world. Privatisation,
liberalisation and deregulation are the distinguishing
features of all Bank-Fund programmes and are
necessary conditions to all Bank-Fund financing.
Most major bilateral donors and the United Nations
(UN) agencies have aligned their aid programmes to
Bank-Fund policy frameworks. The more a developing
country liberalises its economy along the lines
prescribed by the Bank and the Fund, the more
bilateral and multilateral aid it is likely to receive.

The Bank and Fund believe that international
trade can play a crucial role in poverty reduction by
providing jobs and driving economic growth for
developing countries and that rapid economic growth
can be best achieved if countries enter export markets
through trade and strengthen their links with the
global economy.

Despite proclamations by the Bank that high
tariffs and Non-Tariff Barriers in wealthy countries
undermine the potential for economic growth and
poverty reduction in developing countries, the Bank
and Fund are unable to force the rich countries of the
OECD to reduce their own subsidies and dismantle
their trade barriers.

On the other hand, developing countries under
Bank-Fund loan regimes are exhorted to undertake
drastic policy reforms in all their sectors, from banking,
finance, public expenditure and trade to agriculture,
services, investment, infrastructure and even the
judiciary. The main purpose of these reforms is to open
up developing country markets to access by foreign
private investors and corporations and to remove all
barriers to international trade and investment in
developing countries. Over the past 15 years, Bank-
Fund imposed trade conditionalities have included the
removal of non-tariff barriers and quantitative restrictions,
and tariffs and customs administration reforms.

According to the Bank and Fund, the Doha
Round “offers an unprecedented chance to free up
trade and contribute to poverty reduction on a global
scale” (2) which can only be achieved through an
“ambitious outcome” (3) in the Doha negotiations. The
Bank and Fund believe that market access in agriculture
through large cuts in bound tariff rates and
bound levels of domestic supports and subsidies is
the key to success in the current negotiations. While
they accept that developed countries must take the
lead in this, they call upon middle-income countries-
especially those in the G-20-to remove tariffs and
other barriers in their agriculture markets, reduce tariffs
in manufacturing, and open up their services markets
for liberalization. Instead of pushing for “policy
space,” all developing countries must use the opportunity
of the Doha negotiations to lower trade and
investment barriers.

The Bank and Fund broadly describe their trade
related work in developing countries as “aid for trade.”
World Bank “aid for trade” activities include technical
assistance, capacity building, institutional reform,
investment in trade related infrastructure, and assistance
to “offset adjustment costs”, i.e., to make the
transition from tariffs to other sources of revenue.
Much of Bank lending for trade has gone towards
trade facilitation in more than 50 countries. Basically,
the Bank works with its debtor governments to shape
national institutions, laws and regulations, infrastructure,
services, financial systems and other sectors of
the economy to facilitate trade liberalization. The Bank
also conducts training programs through the World
Bank Institute to prepare the policy ground for trade
liberalization, often in partnership with leading think
tanks, universities and other teaching institutions in
developing countries.

The IMF on its part claims that, “The work of the
IMF and the WTO is complementary” and that, “The
two institutions work together to ensure a strong
system of international trade and payments that is
open to all countries.” (4) The partnership works on
many levels, to ensure greater coherence in global
economic policymaking. A cooperation agreement
between the two organizations, covering various
aspects of their relationship, was signed shortly after
the creation of the WTO. The IMF has observer
status at the WTO, and IMF and WTO staff participate
actively in each others’ meetings, committees and
working groups. Trade policy issues feature prominently
in Fund surveillance activities and the WTO is
required to consult the IMF on issues concerning
monetary reserves, balance of payments, and foreign
exchange arrangements. In April 2004, the IMF
established the Trade Integration Mechanism (TIM), a
special facility to lend to WTO member countries
whose balance of payments positions suffer as a result
of multilateral trade liberalization. The IMF anticipates
that its cooperation with the WTO will intensify in
WTO agreements on financial services, trade facilitation,
and agriculture (in particular, the cotton sector).
A highlight of Bank-Fund-WTO collaboration is
the Integrated Framework (IF) for Trade-Related
Technical Assistance to Least-Developed Countries
(LDCs). The IF is a multi-donor program that aims to
strengthen the capacity of LDCs to formulate WTO
compliant trade policies, negotiate trade agreements,
and tackle production issues in a manner favourable to
liberalization in their domestic economies. In particular,
the IF ensures that poorer member countries incorporate
“appropriate trade reforms” into their national
development policies through PRSPs, which form the
basis for loans by the Bank and the Fund.

The IF is financed through a trust fund to which
the Bank has already allocated US$ 1.5 million, and
which has total pledges from donors for US $30.1
million. The IF has initially been implemented on a
pilot basis in Cambodia, Madagascar and Mauritania,
and was the driving force behind Cambodia’s rapid
accession to the WTO. The IF was then extended to
Burundi, Djibouti, Ethiopia, Guinea, Lesotho, Malawi,
Mali, Nepal, Senegal, Yemen, and Eritrea. At the end of
March 2005, 28 LDCs were at different stages of the IF
process. During the September 2005 World Bank IMF
Annual Meetings, the Bank-Fund Development
Committee endorsed a proposal for an enhanced IF
that could be expanded to all countries that receive
concessional loans from the Bank’s International
Development Association (IDA).

High-ranking staff of the IMF, World Bank and
the WTO maintain close contact with each other and
with major bilateral donors to ensure that developing
countries do not stray away from the liberalization and
privatization paths. The Bank and the Fund produce
several research and analytical documents every year,
that promote trade and investment liberalization and
private sector development. Much of the “technical
assistance and “capacity building” they provide to
developing countries actively support the WTO
framework and disciplines.

As the two of the most powerful pillars of the
current global economic and financial architecture (the
third being the WTO), the IMF and the World Bank are
well positioned to ensure that their liberalisation
dogma is embedded deep into the domestic policies of
developing countries, even larger and more influential
ones such as India and Brazil. Fighting the WTO
regime therefore demands that we also fight the World
Bank and the IMF and the neo-liberal corporate
agenda they force on the people.

(1) All words in bold are defined in the Glossary included at the end of this Guide.

(2) Aid for Trade: Competitiveness and Adjustment. Development Committee, the International Monetary Fund and the World
Bank, April 12, 2005.

(3) Ibid.

(4) http://www.imf.org/external/np/exr/facts/imfwto.htm

The Derailer’s Guide to the WTO: Section 5

 The Colombo Declaration: 10 Years is Enough - No Deal at the WTO Hong Kong Ministerial Meeting!

Declaration of the Organizations, Movements and Individuals Gathered
for the Asian Strategy Meeting on the World Trade Organization,
Colombo , Sri Lanka , June 6-7, 2005

From December 13 to 18, 2005, the World Trade
Organization’s Sixth Ministerial Meeting will take place
in Hong Kong . This event will have massive consequences.
Either the WTO finally gets consolidated as
the prime mechanism of global trade liberalization, or it
unravels a third time, possibly crippling permanently
its usefulness as an institution for the promotion of
the interests of Northern transnational corporations
(TNCs).

Dismal Decade

That the WTO is suffering a deep crisis of legitimacy
and credibility as it marks its 10 th year of existence
comes as no surprise to us in Asia . When it was
founded in 1995, it was sold to developing and least
developed countries as an institution that would bring
about growth, reduce global poverty, and decrease
income inequality by expanding free trade. A decade
later, the evidence is undeniable that the WTO has
brought about exactly the opposite effects.

– The Agreement on Agriculture (AOA) has proved
to be nothing but a gigantic dumping mechanism
for cheap subsidized grain and foodstuffs from the
United States and the European Union on the
agricultural markets of developing and least
developed countries’, destroying the livelihoods of
hundreds of millions of farmers and agricultural
workers and provoking the suicide of many of them
and their dependents.
– The Trade Related Intellectual Property Rights
(TRIPs) Agreement has functioned to rob our
communities of their collective right to resources,
seeds, indigenous knowledge and even life itself,
and to thwart development by allowing
transnational corporations to monopolize technological
innovations throughout the whole range of
industries. It has seriously undermined people’s
food sovereignty. By putting corporate profits
above public health concerns, TRIPs has facilitated
a public health crisis in the form of HIV-AIDS that
has drastically setback many parts of Asia as well
as Africa .
– The General Agreement on Trade in Services
(GATS), with its central principle of “national
treatment” providing foreign investors equal rights
as national actors, is proving to be an extraordinarily
powerful tool for TNC entry into and control of
the service sector. This situation is particularly
acute for developing and least developed countries
which accounts for more than 50% of their gross
domestic product. Especially threatened are water,
electricity, telecommunications, health, educational
and other essential services that necessitate public
generation and delivery systems in order to assure
all citizens equitable access to them. GATS will lead
to the shrinking of the public sector, threatening
national sovereignty and provoking serious social
unrest.

Although it claims to provide potential benefits
to LDCs, the GATS Mode 4 (the movement of natural
persons) carries a big risk of allowing big business
control of the movement of people, resulting in the
trampling of the rights of migrant workers.

WTO-mandated liberalization and WTOsanctioned
dumping have resulted in job losses and
welfare erosion across the board, but the brunt of their
negative impacts have fallen on women, who make up
more than half of the work force in agriculture,
industry, and services in many countries but receive
lower remuneration, are subjected to worse working
conditions, are less protected by labor and human
rights codes, and face greater job insecurity than men.
Indeed large numbers experience outright exclusion
from the labor force, leading to the forced-migration of
many. Privatization of basic services also increases the
burden of social reproduction for women.

WTO rules also accelerate the marginalization of
already vulnerable groups such as dalits and indigenous
people who now comprise a significant number
of the poor and hungry.

The Anti-Development
July Framework Agreement

In a stupendous display of cynicism, the trade
superpowers have labeled the current round of trade
negotiations the “Doha Development Round.” Yet
there is nothing in the Doha Agenda that promotes
development. In fact, everything in the so-called “July
Framework Agreement” that serves as the basic text to
conclude the current round is profoundly antidevelopment:
– The framework on agriculture is designed to
maintain or expand such mechanisms of massive
subsidization for Northern agricultural interest such
as the “Green Box” or the “Blue Box” while demanding
market access to Southern agricultural markets
through a new round of steep tariffs cuts, if not
outright elimination of tariffs.
– The framework for non-agricultural market access
(NAMA) aims to radically bring down and bind
industrial and manufacturing tariffs to allow TNC
products to flood Southern markets, resulting in
unemployment and contractualization, as well as
deindustrialization and the inability of developing
and least developed countries to use trade policy as
an instrument of industrialization. It will also result
in greater hardship for already suffering fisherfolk,
particularly those in tsunami-ravaged countries,
whose livelihoods will be further eroded by
NAMA’s proposed liberalization of fisheries.
– The July Framework relegates to the backburner the
principal concerns of developing and least developed
countries, which are development, the
institutionalization of Special and Differential
Treatment and addressing problems associated with
the high cost of implementing previous liberalization
commitments,

People’s Resistance and Corporate Response

Not surprisingly, the pro-corporate agenda of the
WTO has provoked massive resistance over the last
10 years. In Seattle in December 1999, the combination
of the refusal of developing and least developed
countries to rubberstamp a new round of liberalization
and massive anti-WTO mobilization by global civil
society brought about the collapse of the third
ministerial meeting. In Cancun in September 2003,
resistance by developing and least developed countries
organized into the G-20, G-33, and G-90, where the
least developed countries played a critical leadership
role, combined with civil society demonstrations and
actions inside and outside the Cancun Convention
Center that led to the collapse of the fifth ministerial.

To salvage the WTO as an instrument of the
TNC agenda, the United States and the European
Union successfully mounted an institutional coup in
July 2004 wherein the WTO General Council came out
with a decree that could only legally be issued by a full
ministerial meeting: the now notorious July Framework
Agreement. This maneuver, however, could only
succeed owing to the cooptation of G 20 leaders Brazil
and India as full negotiating partners in the so-called
Five Interested Parties (FIPs), with the EU and US
designating them to “represent” the South. Once
again, the big Northern powers deployed divide-andrule
against the South; once again they succeeded.
Once again, the Northern elites stoked the ambitions
of their Southern counterparts; once again they
succeeded in turning them against their people.
Nonetheless, the resort to threat, deception, and
cooptation underlines the fact that developing and
least developed countries have lost all faith in the
possibility of reforming the WTO so that extraordinary
methods must be used to bring them on board.

Why No-Deal-in-Hong Kong
is the only Viable Strategy

With nothing to gain and everything to lose by
agreeing to the July Framework, the developing and
least developed countries must resolutely stand their
ground and refuse to make the latest concessions
demanded by the big trading powers. Global civil
society must consistently pressure the governments
of the South to reinforce their determination and force
them back into line should they, like the governing
elites of Brazil and India , falter. In this connection, we
demand that governments put the interests of people
above that of transnational corporations.

By refusing to give their consent to the pro-TNC
agenda in each of the key negotiating areas in the
negotiations leading up to the Hong Kong meeting and
during the Ministerial itself, the developing country
governments have it in their power to stalemate the
latest liberalization offensive. This strategy would, of
course, be tantamount to preventing a deal from being
reached at the sixth ministerial, but, as in Seattle , as in
Cancun , no deal is better than a bad deal.

Derailment of the sixth ministerial will not end
the threat of free trade to the developing and least
developed countries. They will still have to contend
with bilateral trade and multilateral trade
agreements-the so-called WTO plus agreements-
pushed by the US , EU, and Japan . Nevertheless,
given the WTO’s centrality in the TNC agenda, a
failed ministerial could help bring about a new
global power equation marked by more favorable
conditions for the achievement of what we consider
to be strategic prerequisites for the success of propeople
sustainable development:
– the expulsion of the WTO from the domains of
agriculture and fisheries, services and intellectual
property rights;
– frustration of the WTO’s aim to de-industrialize the
developing countries and least developed countries
and make them captive markets for the TNCs;
– and the creation of a trade regime that genuinely
promotes pro-people and rights-based sustainable
development.

In conclusion, we declare our solidarity with
peoples and communities fighting back against the
WTO and bilateral, regional and multilateral free
trade agreements in Asia, Africa, Latin America ,
and other parts of the world.

We call all to participate in activities taking
place within the next few months aimed at preventing
a deal from being reached at the Hong Kong
Ministerial, be these lobbying activities, mass
mobilizations, and non-violent direct action. We
also urge civil and political movements to mobilize
and organize activities and actions designed to
pressure national governments to protect the
peoples’ interest. We urge everyone to mobilize
their co-workers, families and friends and bring
them to the “derail-the-ministerial” demonstrations
and events in Hong Kong in mid-December. We
also call on developed country governments to
desist from the tactics of intimidation and, manipulation
that they regularly employ in negotiations...
We, workers, organized and un-organized,
peasants, dalits, indigenous peoples, fisherfolks,
women, students, migrants and other marginalized
communities of Asia in solidarity with other
peoples of the world will stand at the forefront of
the global struggle against the Hong Kong
Ministerial Meeting.

DUMP THE ANTI-DEVELOPMENT
JULY FRAMEWORK!

NO DEAL IN THE HONG KONG MINISTERIAL!

PROTEST AGAINST THE WTO!

The Derailer’s Guide to the WTO: Section 6

 The ‘G-Guide’ groupings in the WTO Agriculture Negotiations

G20: Argentina, Bolivia, Brazil, Chile, China, Cuba, Egypt, India,
Indonesia, Mexico, Nigeria, Pakistan, Paraguay, Philippines,
South Africa, Tanzania, Thailand, Venezuela and Zimbabwe.

The G20 currently comprises 19 developing country
members of the WTO. Led by Brazil and India, the G20
has become one of the most important groupings in
the WTO negotiation since the Cancun ministerial in
2003. The group has recently proposed a compromise
formula for tariff reduction (middle ground between
the Swiss and Uruguay round approach), which has
been widely accepted as a basis for further negotiation.
While arguing for the limited use of “sensitive
products” (a mechanism which would mainly benefit
developed countries), the group is more supportive to
the “special products” (SPs) and “special safeguard
mechanism” (SSM) favoured by the G33. The group
has an offensive interest in reviewing domestic
supports, especially on the use of the Blue Box where
the group is the main driver of the review process to
ensure that payments under this provision are less
trade distorting than AMS* measures, and on the
Green Box where it wants to see new disciplines to
avoid box shifting. On export competition, the group
has proposed a five-year deadline for eliminating all
subsidies. (*Aggregate Measurement of Support:
support measures that need to be reduced under the
AoA, known as the Amber Box.)

G33 Antigua and Barbuda, Barbados, Belize, Benin, Botswana,
China, Congo, Cote d’Ivoire, Cuba, Dominican Republic,
Grenada, Guyana, Haiti, Honduras, India, Indonesia, Jamaica,
Kenya, Republic of Korea, Madagascar, Mauritius, Mongolia,
Mozambique, Nicaragua, Nigeria, Pakistan, Panama, Peru,
Philippines, Saint Kits and Nevis, Saint Lucia, Saint Vincent and
the Grenadines, Senegal, Sri Lanka, Suriname, Tanzania,
Trinidad and Tobago, Turkey, Uganda, Venezuela, Zambia and
Zimbabwe.

The G33, or known as “friends of special products”
is understood to comprise of 42 countries. On the
tariff reduction formula, the group is opposing the
harmonization of tariffs across countries, and
insisting on taking into account the different tariff
structures of developing countries. The G33 is the
main proponent of SPs and SSM (see G20 above).
On SPs, it insists on self-selection on the basis of
the indicators developed. On SSM, it proposes that
this mechanism should be open to all developing
countries for all agricultural products. Moreover,
the SSM should be automatically triggered by
either import surges or prices falls. The group is
also very vocal on rejecting the developed countries’
proposal of cutting de minimis provision
allowed for developing countries.

Cairns Group Argentina, Australia, Bolivia, Brazil, Canada, Chile,
Colombia, Costa Rica, Fiji, Guatemala, Indonesia,
Malaysia, New Zealand, Paraguay, Philippines,
South Africa, Thailand and Uruguay

The group comprises of traditionally agriculture
exporting countries. The Cairns Group has an
obvious offensive interest in market access. It
seeks harmonisation of import tariff across WTO
members, and, like the US, views the G20 proposals
as “lacking ambition”. The Cairns Group would like
to limit as far as possible the sensitive products,
but the group is divided on the SPs & SSM, which
is also the case regarding the issue of trade distorting
domestic support, where some members are
significant users of the Amber Box. Concerning the
Blue Box, Green Box, and export competition, it
shares a similar offensive position as the G20. That
means the group is seeking restrictions in subsidies
predominantly used by developed countries.

G10 Bulgaria, Chinese Taipei, Republic of Korea, Iceland, Israel,
Japan, Liechtenstein, Mauritius, Norway and Switzerland

This is the group of ten countries with the most
defensive interest in the agriculture negotiation. It
opposes the G20 formula, particularly the tariff capping
element. It argues for a free determination of products
to be designated as sensitive. The G10 also has strong
defensive position regarding domestic support. Like
the EU, it is not interested in expanding criteria, but
wants to maintain the status quo of the Blue Box. Also,
it opposes the proposal to review and clarify criteria
for the Green Box. As for export competition, the G10
wants a long time frame for the elimination of export
subsidies. Moreover, very much like the EU, it links
this particular issue to outcomes in other areas of
negotiation such as NAMA and Services.

African Union/Group, ACP, least-developed countries
(also known as the G90)
Angola, Antigua and Barbuda, Bangladesh, Barbados, Belize, Benin,
Botswana, Burkina Faso, Burundi, Cambodia. Cameroon, Central
African Republic, Chad, Congo, Côte d’Ivoire, Cuba, Democratic
Republic of the Congo, Djibouti, Dominica, Dominican Republic,
Egypt, Fiji, Gabon, The Gambia, Ghana, Grenada, Guinea (Conakry),
Guinea Bissau, Guyana, Haiti, Jamaica, Kenya, Lesotho, Madagascar,
Malawi, Maldives, Mali, Mauritania, Mauritius, Morocco, Mozambique,
Myanmar, Namibia, Nepal, Niger, Nigeria, Papua New Guinea,
Rwanda, Saint Kitts and Nevis, Saint Lucia, Saint Vincent and the
Grenadines, Senegal, Sierra Leone, Solomon Islands, South Africa,
Suriname, Swaziland, Tanzania, Togo, Trinidad and Tobago, Tunisia,
Uganda, Zambia, Zimbabwe

This grouping, also known as the G90, has 64 WTO
member countries. Although members of the group do
not share all positions in the negotiations, the most
crucial and common concern of the group is the
preference erosion, which is related to all three pillars
of the agriculture negotiation. Many of the countries
in the group are very dependant on certain Northern
markets for their agriculture exports due to the existing
preferential schemes. Countries in the G90 want to see
specific and concrete solutions to the problems of
While having a very offensive position on market
access, the US adopts almost an opposite approach
on domestic support. It views the G20 formula
proposal as not ambitious enough, and emphasizes
the limited scope and flexibility of sensitive products.
Plus, it strongly opposes SSM by arguing the
duplication with SPs. At the same time, it does not
want to see changes to the Green Box status quo.
The US is the main proponent for the expansion of
the Blue Box criteria, which would allow for its
counter cyclical payments to continue and expand.
The US is the main user of export credits and food
aid schemes to deal with its over supply of agriculture
products. Thus, it has adopted a defensive
position in export competition in the aspects linked
to these two elements.

United States

status quo in both the Blue Box and Green Box and
opposes the review proposals. It has a very
sensitive defensive interest in the export competition.
It argues for a long time frame for the elimination
of export subsidies, and hasn’t so far given
any end date for these subsidies. Plus, it has put
forth several pre-conditions in order to achieve this
elimination, including the ambitious liberalization in
other areas such as non-agricultural market access
(NAMA) and services (GATS).

European Union

The EU has been taking a rather defensive approach
in the market access negotiations. Although
accepting the G20 proposal as a starting point, it
criticises the formula as too ambitious. However,
unlike the G10, the EU also has offensive interest in
accessing other countries’ markets. At the same
time as it argues for a flexible use of sensitive
products, it exerts pressure on developing countries
to restrict the flexibility regarding SPs & SSM.
On domestic support, the EU wants to maintain the
preference erosion. Many suggest that preferences
should be maintained until such time as all domestic
and export subsidies are removed that affect their
commodities.

The Derailer’s Guide to the WTO: Section 7

 Glossary and Trade Jargon

Agreement on Agriculture. Part of the Uruguay
Round agreement covering issues related to agriculture
– e.g., market access, export subsidies, and
internal support.

Aggregate Measure of Support (AMS). An index
that measures the monetary value of the extent of
government support to an economic sector. As defined
in the Agreement on Agriculture, the AMS includes
both direct and indirect government supports to the
sector, if they are judged to create distortions in the
market. For example, it includes both direct payments
to farmers, such as payments to guarantee them a
higher than world market price, as well as indirect
payments such as taxes on food at the point of sale to
consumers that are used to support farm programmes.
The AMS is different from another broader concept of
agricultural support called the Producer Subsidy
Equivalent (PSE) because certain PSE policies are
excluded from the AMS, and because of the methodology
used to compute direct payments and market price
support benefits.

Amber Box. A popular expression referring to the set
of domestic supports which are considered to be
production and trade distorting and are measured by
an index termed the Aggregate Measure of Support
(AMS).

Bound Tariff Rates. Tariff rates resulting from
GATT negotiations or accessions that are incorporated
as part of a country’s schedule of concessions.
Bound rates are enforceable under Article II of GATT.
If a GATT contracting party raises a tariff above the
bound rate, the affected countries have the right to
retaliate against an equivalent value of the offending
country’s exports or receive compensation, usually in
the form of reduced tariffs of other products they
export to the offending country. However, countries
are free at any time to reduce their bound tariffs still
further. Bound tariffs can be lowered but not raised.
Blue Box. A popular expression to represent the set
of provisions in the Agreement on Agriculture that
exempts from reduction commitments those program
payments received under production limiting
programmes - if they are based on fixed area and
yields or a fixed number of head of livestock, or if they
are made on 85 per cent or less of base level of
production. US’ Deficiency payments were exempt
under this provision as compliance with acreage
reduction programmes was required for eligibility, and
payments were made on no more than 85 per cent of
established base acreage, and individual farm yields
had been fixed since 1996. Blue box policies are
contained in Article 6.5 of the Agreement on Agriculture.
Bretton Woods. The United Nations Monetary and
Financual Conference held at Bretton Woods, New
Hampshire, in 1944 produced charters for the World
Bank (WB) and the International Monetary Fund
(IMF). It also proposed the establishment of the
International Trade Organization which turned into the
GATT which in turn led into the WTO.

Country Schedules. The official schedules of
subsidy commitments and tariff bindings as agreed to
under GATT for member countries.

Decoupled Payments. These supports paid to
producers are not dependent on prices or production
levels. In theory, no production is required to receive
these payments, though in reality, production continues
while payments are made based on some other
criteria. In the AoA, decoupled payments are deemed
to be non-trade distorting and are allowable under the
green box.

De Minimis Provision. This provision allows
countries to maintain a certain level of AMS. For
developed countries this level can be up to 5 per cent of
the value of production for individual products (product
specific support), and 5 per cent of the value of a
country’s total agricultural production (non-product
specific support). For developing countries, support can
be up to 10 per cent. Within the Agreement on Agriculture,
however, countries can only provide these levels of
support if they are within the 1992 support levels
because of the due restraint clause.

Deficiency Payment. This was allowed under the
blue box since, in the US, compliance with acreage
reduction programmes was required for eligibility. It is
a direct government payment made to US farmers who
participated in wheat, feed grain, rice, or cotton
programmes prior to 1996. Deficiency payments
bridged the gap between a the national average market
price and a politically determined target price to
support farm incomes which were set by the US
Department of Agriculture (USDA). The total payment
to a farmer was equal to the payment rate, multiplied
by a farm’s eligible payment acreage and the
programme yield established for the particular farm.
Deficiency payment programmes in the US were
eliminated in the 1996 Farm Act and have since been
replaced by another subsidy programme, the production
flexibility contract payment.

Derailment of the WTO. Derailment involves
zeroing in on the key point of vulnerability of the
WTO: its consensus system of decision-making.
Concretely, it means working to prevent consensus
from emerging in any of the key negotiating areas prior
to and during the Sixth Ministerial in Hong Kong.

Dispute Settlement Body (DSB). The General
Council of the WTO, composed of representatives of
all member countries, convenes as the Dispute
Settlement Body to administer rules and procedures
agreed to in various agreements. The DSB has
authority to establish panels, adopt panel and Appellate
Body reports, maintain surveillance of implementation
of rulings and recommendations, and authorize
suspension of concessions or other obligations under
the various agreements.

Due Restraint Provision. The UR Agreement on
Agriculture provision that sets a 9-year period during
which domestic support policies and export subsidy
arrangements are exempt from GATT challenges.
Dumping. Occurs when goods are exported at a price
less than their normal value, generally meaning they
are exported for less than they are sold in the domestic
market or third-country markets, or at less than
production cost.

Export Subsidies. Special incentives, such as cash
payments, extended by governments to encourage
increased foreign sales; often used when a nation’s
domestic price for a good is artificially raised above
world market prices.

Formula-based Tariff Reductions. A method of
negotiating tariff reductions using an agreedupon
formula applied to tariff rates (with limited exceptions
being granted for very sensitive items) by all contracting
parties. GATT (General Agreement on Tariffs and
Trade). An agreement originally negotiated in Geneva,
Switzerland in 1947 among 23 countries, including the
US, to increase international trade by reducing tariffs
and other trade barriers. The agreement provides a
code of conduct for international commerce and a
framework for periodic multilateral negotiations on
trade liberalization and expansion.

THE FORMULA AS A HARMONIZING FORMULA:
when a formula is referred to as having a “harmonizing”
effect it is designed principally to make steeper
cuts on higher tariffs, so as to bring all the final tariffs
closer to the same level. A COEFFICIENT: the number
that determines the final tariff rate for each product.
For example, if the coefficient is set at 25, then the
formula will be designed to bring the final tariffs close
to or at 25 percent. SWISS FORMULA: this is a
harmonizing formula that uses a single mathematical
formula to produce a narrow range of final tariffs. A
“simple” Swiss formula will select an arbitrary coefficient
for all countries irrelevant of their starting point
so that everyone’s tariffs are set at the same level. For
example, countries would select a single coefficient
and all WTO members will have to bring their tariffs
close to that level. GIRARD FORMULA: this is a
harmonizing formula that uses a single mathematical
formula to produce a narrow range of final tariffs. It
differs from the simple Swiss formula in that each
country has its own coefficient calculated on the basis
of the country’s national tariff average. It is often
referred to as a “Swiss-type” formula. URUGUAY
ROUND FORMULA: this is the formula that was used
in the Uruguay Round for agriculture tariff reductions.
Tariffs are cut by a percentage average over a number
of years. For example, developed countries agreed to
cut tariffs by an average of 36% over six years with a
minimum of 15% on each product. The combination of
average and minimum reductions allows countries the
flexibility to vary their actual tariff reductions on
individual products so that some cuts will be greater
than others. CANADIAN “INCOME TAX” FORMULA:
this is a new formula that was proposed in June 2005 in
the Committee on Agriculture. It is a harmonizing
formula. Instead of applying a single cut to the entire
tariff, different percentages are applied to different
portions of the tariff, in a similar way to which European
income tax is calculated. ABI FORMULA: the
Argentina, Brazil and India (ABI) proposal for formula
in NAMA. The formula is essentially a Girard formula.

GATT. Launched in 1947, the General Agreement on
Tariff and Trade, was established to provide and
administer the rules for a multi-lateral trading system.
Green Box. A colloquial term that describes domestic
support policies that are not subject to reduction
commitments under the Agreement on Agriculture.
These policies are said to affect trade minimally, and
include support such as research, extension, food
security stocks, disaster payments, and structural
adjustment programmes.

July Framework. A framework agreement mainly on
agriculture reached at the General Council of July 31,
2004 in Geneva, Switzerland. It provides the operative
framework for further negotiations on agriculture, nonagricultural
market access and other issues.

Liberalisation. A process of removing the barriers to
trade in order to achieve the free trade of goods,
services, intellectual property and investment across
international borders. A market-oriented trading
system is one which has liberalised its trading system.
Market Access. The extent to which a country
permits imports. A variety of tariff and nontariff trade
barriers can be used to limit the entry of foreign
products, thereby reducing market access.
Modalities. Methodology to be followed during the
negotiations

Most-favored-nation (MFN) Status. An agreement
between countries to extend the same trading privileges
to each other that they extend to any other
country. The MFN rule is a founding principle of the
WTO. Under a most-favored-nation agreement, for
example, a country will extend to another country the
lowest tariff rates it applies to any third country. A
country is under no obligation to extend MFN
treatment to another country, unless they are both
members of the WTO, or unless MFN is specified in an
agreement between them. The WTO allows some
exceptions to the rule, for instance to allow developed
countries to extend more favourable trading terms to
least developed countries.

Neo-liberalism. Neo-liberalism is an economic
ideology centered around the values of globalization -
free market, free trade and the unrestricted flow of
capital. This rejects government intervention in the
economy.

New Issues. See Singapore issues.

Non-tariff Barriers. Regulations used by governments
to restrict imports from, and exports to, other
countries, including embargoes, import quotas, and
technical barriers to trade. These include health and
environmental standards.

OECD (Organization for Economic Cooperation
and Development). An organization founded
in 1961 to promote economic growth, employment, a
rising standard of living, and financial stability; to
assist the economic expansion of member and nonmember
developing countries; and to expand world
trade. The member countries are Australia, Austria,
Belgium, Canada, the Czech Republic, Denmark,
Finland, France, Germany, Greece, Hungary, Iceland,
Ireland, Italy, Japan, Luxembourg, Mexico, the Netherlands,
New Zealand, Norway, Poland, Portugal, South
Korea, Spain, Sweden, Switzerland, Turkey, the United
Kingdom, and the US.

Peace Clause. See Due Restraint Provision.

Privatisation. This is the transfer of ownership from
the public sector to the private sector. Privatisation
has been pushed by international financial institutions
as an economic tool to make the exploitation of
resources be as efficient as possible. This has been
the central issue of many struggles across the globe as
in many cases, it has limited access to essential
services to only those who can afford it.

Producer Subsidy Equivalent (PSE). A broadly
defined aggregate measure of support to agriculture
that combines into one total value aggregate, all the
transfers which arise from the different instruments of
agricultural support, both trade and supposedly nontrade
distorting. In the US, these include direct
payments to producers financed by budgetary
outlays, such as deficiency payments, budgetary
outlays for certain other programmes assumed to
provide benefits to agriculture (such as research and
inspection and environmental programmes) and the
estimated value of revenue transfers from consumers
to producers as a result of policies that distort market
prices. The PSE seeks to reflect the full range of
economic distortions arising from agricultural policies.
Production Control. Any government program or
policy intended to limit production. In agriculture
these have included acreage allotments, acreage
reduction, set-asides, and diverted acreage.

Production Flexibility Contract Payments
(PFCP). Direct payments to US farmers for contract
crops through 2002 under the US 1996 Farm Act.
Payments for each crop are allocated each fiscal year
based on fixed percentage shares specified in the act.
The percentages were based on the Congressional
Budget Office’s March 1995 forecast of what deficiency
payments would have been for 1996 to 2002
under the 1990 farm legislation. PFCPs were initially
higher than deficiency payments paid to farmers.
However, they have been set on a descending scale,
heading for zero payments by 2002.

Sanitary and Phytosanitary (SPS) Measures.
Technical barriers designed for the protection of
human health or the control of animal and plant pests
and diseases. Special Safeguard provisions. Provisions
within the UR Agreement on Agriculture
designed to protect the products that were subject to
tariffication (as a result of implementation of the
Agreement) from surges in imports or large price
declines.

Singapore Issues. The Singapore or New Issues are
investment, competition policy, government procurement
and trade facilitation. They are called the
Singapore Issues because of the working groups
established on each issue at the WTO’s first Ministerial
in Singapore in 1996. Developing countries are
largely opposed to the inclusion of the Singapore
Issues in current negotiations.

Sensitive products. This would allow developed
countries to designate certain sensitive products
which they could continue to protect. Developing
countries argue that this will prevent them from having
access to developed country markets.

Special and Differential Treatment. SDT or S&D
is less arduous treatment conferred on developing
countries in the implementation of WTO rules. For
example, developing countries may have lower tariff
reduction requirements or longer phase in periods.
Under SDT, ‘less than full reciprocity’ is expected of
developing countries in that they need not offer
reciprocal treatment to developed countries. It also
includes the proposed Special Products and the
Special Safeguard Mechanism (SSSM). Developing
country demands for SDT have largely fallen on deaf
ears in recent WTO negotiations.

Special products. The concept of Special Products
(SP), would allow developing countries to have the
guaranteed flexibility to designate an “appropriate
number” of products for less market access reduction.
The operational criteria would be based on food
security, livelihood security and rural development.
Special Safeguard Mechanism. a proposal to
allow developing countries to increase their protection
in times of import surges or fluctuations in world
market prices,

Special Treatment Clause. A clause in the UR
Agreement on Agriculture that gives countries the
option of foregoing tariffication on some commodities
and instead requires minimum imports above the
minimum access commitments of 3-5 percent of
consumption. This clause was added to temporarily
placate Japan and South Korea by providing protection
for their rice sectors. In the case of Japan, for
instance, the minimum import requirements for rice are
at 4 percent of consumption in 1995, rising to 8 percent
in 2000.

Tariff. A tax imposed on imported products by a
government which consumers have to pay. A tariff may
be either a fixed charge per unit of product imported
(specific tariff) or a fixed percentage of value (ad
valorem tariff). Tariffs are generally imposed when
governments do not want imported products to
compete with locally made ones. Tariffs are also
sometimes used to tax exports, in order to generate
revenue, or to keep certain products available on the
domestic market.

Tariff Escalation. When import duties are higher on
semi-processed products than on raw materials, and
higher still on finished products. This escalation
serves to keep the global market open for raw materials
but ensures that the countries producing higher-end
processed products are insulated from competition.
Effectively, this entrenches developing countries in
the position whereby they remain exporters of cheap
raw products since their processed products, if any,
are barred from entering the global market.

Tariff Peaks. High tariffs (far above the average
tariffs of a country) used to shelter some ‘sensitive’
industries or products, such as textiles, leather goods,
and food products.

Tariff-rate Quota. Quantitative limit (quota) on
imported goods, above which a higher tariff rate is
applied. A lower tariff rate applies to any imports below
the quota amount.

Tariffication. The process of converting nontariff
trade barriers to bound tariffs. This is done under the
UR agreement in order to improve the transparency of
existing agricultural trade barriers and facilitate their
proposed reduction.

Trade Liberalization. A term which describes the
complete or partial elimination of government policies
or subsidies that restrict trade. The removal of tradedistorting
policies may be done by one country
(unilaterally) or by many (multilaterally).

UR (Uruguay Round) Agreement. The Uruguay
Round of multilateral trade negotiations, conducted
under the auspices of the GATT, is a trade agreement
designed to open world markets. The Agreement on
Agriculture is one of the 29 individual legal texts
included in the Final Act under an umbrella agreement
establishing the WTO. The negotiation began at Punta
del Este, Uruguay in September 1986 and concluded in
Marrakesh, Morocco in April 1994.

World Trade Organization (WTO). Established
on January 1, 1995 as a result of the Uruguay Round,
the WTO replaces GATT as the legal and institutional
foundation of the multilateral trading system of
member countries. It provides the principal contractual
obligations determining how governments frame and
implement domestic trade legislation and regulations.
And it is the platform on which trade relations among
countries evolve through collective debate, negotiation,
and adjudication. AO

Sources:

Bello, Kwa, Guide to the Agreement on Agriculture:
Technicalities and Trade Tricks Explained, Focus on the
Global South, 1998

Smaller, Carin, Formula One Racing: Who’s Going to Win
the Grand Prix?, TIP/IATP, June 2005

Goode, Walter, Dictionary of Trade Policy Terms, World
Trade Organization, 2004

Dommen, C. and Kamoltrakul, K., The Practical Guide to the
WTO for Human Rights Advocates, 3D and Forum Asia,
2004.

Wikipedia, the free encyclopedia

Other organizations to check out:

(there are a whole lot more,
these are just to start you off in the right direction)

Christian Aid: www.christianaid.org.uk

GATSwatch: www.gatswatch.org

Global Exchange: www.globalexchange.org

Hemispheric Social Alliance: http://www.asc-hsa.org

Institute for Agriculture and Trade Policy (IATP):
www.iatp.org/global

Institute for Global Justice (IGJ): www.globaljust.org

Our World is Not for Sale: www.ourworldisnotforsale.org

Oxfam: http://www.oxfam.org.uk

Polaris Institute: www.polarisinstitute.org

Seattle to Brussels Network (S2B): www.s2bnetwork.org

Thai-US FTA Watch: www.ftawatch.org/eng/

Third World Network: www.twnside.org.sg

Via Campesina: http://www.viacampesina.org

The Road to Hong Kong

The Derailer’s Guide to the WTO: Section 8

1996 Singapore: the first WTO Ministerial.
It was here that the proposal was made
to include investment, competition policy,
government procurement and trade facilitation
in the negotiating agenda.

1999 Seattle: Proposals for a
new round of negotiations are
set against demands for an
assessment of the impacts of
the Uruguay Round. The event
is disrupted by tens of thousands
of protestors calling for
an end to the WTO and its
negotiations. WTO trade
talks collapse for the first
time.

2001 Doha: Provided the ‘mandate’ for the
launch of new multilateral trade negotiations in
the WTO. It produced the Doha Development
Agenda (DDA). The ‘development’ rhetoric
was put in to ease the concerns raised by
developing countries’ implementation issues

2003 Cancun: Supposed to be a ‘stock taking’ exercise to assess
how far the DDA negotiations have gone, yet there were concrete
proposals to begin negotiations on the Singapore issues. Developing
country groupings like the G20, G33 and G90 emerged challenging
the US-EU agenda. Korean farmer Lee Kyung Hae takes his own
life under the slogan ‘WTO kills farmers’. WTO trade talks
collapse for the second time.