WTO Public Forum, October 2007

The WTO’s 7th Annual Public Forum was organized around four key topics that were to be debated during the two days: global governance; coherence between the national and international levels of policy-making and between different multilateral institutions; economic growth and the role of trade as a vehicle for development; and finally, sustainable development.

Plenary opening

In his opening speech, Director-General Pascal Lamy, highlighted the numerous occasions where civil society had a real impact on the WTO agenda. These include the 2003 agreement on cheaper medicines for developing countries, and the inclusion of issues such as fisheries subsidies, environmental goods and services, and food aid in the current Doha negotiations. With regard to the ongoing negotiations concerning agricultural and industrial goods, Pascal Lamy seemed very optimistic, stating that « as positions converge on these key subjects, the pace of work is also accelerating on the rest of the Doha agenda ». Finally, to conclude his keynote address, the Director-General stressed the importance of the progress made in the parallel agenda package on Aid-for-Trade.

Her Excellency, Ms. Tarja Halonen, President of the Republic of Finland, emphasized the need to keep current Doha negotiations alive, in order to harness globalization, stating that bilateral or regional trade agreements were only second best solutions. She said that the way in which the WTO could contribute to control the phenomenon was precisely through a guarantee of a universal, rule-based and non-discriminatory multilateral trading system, which would be especially in the interest of weaker and poorer nations. Concerning the global economic situation today, Ms Halonen stressed that « all countries have the right to develop and to aim for growth and prosperity ». She also mentioned the growing influence of trade on other non-economic dimensions of development such as the environment, democracy and human rights, and urged the WTO and other international organizations to ensure that their policies are coherent with each other. On the particular issue of sustainable development, Ms Halonen stressed that industrialized countries must continue to take all necessary steps to promote access to environmentally sound technologies for all countries, and show solidarity towards developing countries that address climate change. Finally, Ms Halonen congratulated the positive role the WTO has taken in its Aid for Trade programme, which has seen an expansion of its agenda beyond the narrowly defined technical assistance, and is now supporting developing countries efforts to achieve better competitiveness in world trade.

Ms Olubanke King-Akerele, Minister for Foreign Affairs in the Republic of Liberia, said that the topic under discussion was of vital importance to Liberia and to all developing nations around the globe, who have not yet seen the benefits of trade. In this respect, she expressed a rather pessimistic view concerning the Doha negotiations, stating that « recasting the debate and making real progress will be particularly difficult with respect to the full and fair integration of the 50 least developed countries into the multilateral system ». Ms Akerele gave a brief account of her country’s economic situation, and she insisted on the role of trade in solidifying peace in post-conflict situations, and in particular in the Mano River Union Subregion of Liberia, which includes also Sierra Leone, Guinea and Côte d’Ivoire. Here she has made a reference to the growth circles occurring in South East Asia, as an example of positive developments at the sub regional level, that bring peace and security through infrastructural development. Ms Akerele continued by addressing Liberia’s current process of developing a poverty reduction strategy. With the help of the International Trade Center, Liberia developed a trade road map, which includes a series of supply-chain analysis on products such as coffee, cocoa, rubber, wood products, crafts and spices. What is significant about this, Ms Akerele said, is that « we are bringing to the small people what this business of trade is all about ». She then tackled the question of global governance and the role the WTO played in the construction of such a system. She said that the attacks the WTO received from various actors concentrated mainly on the need for a more balanced decision-making power between rich and poor, and a more egalitarian trade regime. She insisted on the fact that if Doha failed, the international community would have failed the global poor, and she also requested to see the gender dimension provided for in WTO trade matters. Ms Akerele concluded her speech by reminding the public about the urgency of the matters under discussion for « the bottom billion ».

Professor Kishore Mahbubani, Dean of the Lee Kuan Yew School of Public Policy, National University of Singapore, spoke of good news with regard to the goal of reducing global poverty by half by 2015, and attributed much of the credit to the WTO, if the happy outcome was to be met. He gave the examples of China and India as countries of unprecedented sustainable growth and poverty reduction, and said that their successes show why the Millennium Development Goals will be met by 2015. Professor Mahbubani added that the reason of such extraordinary success lies in the fact that China and India « have bought and are implementing the essential WTO vision that both they and the world will be better off by opening and liberalizing their economies, especially in the field of trade ». Nevertheless, he noted that the current impasse in the Doha negotiations came from the loss of faith in trade-liberalization from the traditional champions of liberalization, namely the United States and the European Union, who are afraid of loosing their competitiveness to developing countries like China and India. He qualified this situation as tragic. With respect to this new international context, Professor Mahbubani claimed that the role and responsibility of NGOs had to change dramatically. He urged them to change their attitudes towards globalization, giving the example of China’s strong growth since its entry into the WTO, as evidence of the virtues of trade liberalization. He proceeded to give examples of how globalization is actually helping the poorest people around the world, through cell phones, the use of internet, televisions or education. In his concluding remarks, Professor Mahbubani apologized for his optimistic faith in globalization and reiterated his concern with regard to the increase in trade barriers quietly taking place in America and Europe, a phenomenon which he qualified as « fatal » for the developed countries and the world at large, in building a better world for all.

A Governance Audit for the WTO: Roundtable Discussion on Making Global Trade work for Development

The workshop was divided into two parts, first a joint presentation by Dr. Carolyn Deere, Mr. Mayur Patel and Mr. Arunabha Ghosh, from the Global Trade Governance Project, GEG, Oxford, followed by a roundtable discussion with panelists Mr. Harlem Désir MEP, Vice Chairman of the Socialist Group in the European Parliament; Mr. Faizel Ismail, Head of Delegation to the WTO from the Permanent Mission of the Republic of South Africa; Mr. Alejandro Jara, WTO Deputy Director-General; H. E. Mr. Mothae Maruping, Ambassador, Permanent representative of Lesotho to the WTO; Mr. Ricardo Meléndez-Ortiz, Chief Executive, ICTSD; H. E. Mr. Guillermo Valles Galmés, Ambassador, Permanent representative of Uruguay to the WTO.

The joint presentation began by establishing a governance audit as a means to shed light on decision-making process in the WTO. The concept was used as a tool to systematically identify the mechanisms for improving the responsiveness of the WTO system to development priorities and sustainability concerns. The presentation focused on three of the eight functions served by the WTO: negotiation, monitoring, and technical assistance and capacity building.

1. The negotiation function, Mr. Mayur Patel:

Mr. Patel spoke of the informal changes occurring in the decision-making process, and in particular of the rising number of developing country coalitions and their inclusion as platforms for joint-representation in the WTO. He said that what was striking about this new trend of coalition bargaining was the unprecedented institutionalization of these groupings. The result of this is that developing countries are enhancing their representation and negotiation capacity, since their delegations are usually relatively small and ill equipped to influence the negotiations. Coalition bargaining has thus allowed them to partially offset their individual constraints through cooperation in informal gathering. Coalitions have also improved access to WTO decision-making by providing developing countries with a foothold in previously exclusive meetings. Finally, a third implication of coalition representation is that it has improved access of many weak states and the internal transparency of some WTO decision-making processes.

2. The monitoring function, Mr. Arunabha Ghosh:

Mr. Ghosh reminded the audience that the Trade Policy Review Mechanism was established in 1989, as a means to increase the collective understanding of members’ policies. Originally, developing countries accepted the TPRM with some exceptions. The TPRM’s activity has grown significantly over the years: almost all countries have undergone a review at least once, 26 of the 32 LDC members have been reviewed, while they received technical assistance since 2000 to conduct their own reviews, and the use of regional reviews has also been introduced, in order to highlight challenges to trade policy from a regional perspective. Nevertheless, the participation of a majority of WTO’s members remains negligible. Mr. Ghosh estimated that an average LDC has participated only in three meetings, and the likelihood that they will ask a question or raise a point is only 2%. The reasons for this may include questions of maintaining preferences with richer trading partners, other meetings of more immediate importance occurring at the same time as the review meetings, or the lack of technical expertise of developing countries to understand the policies of their trading partners and ask pertinent questions. The outcome of this trend is that developing countries remain with few possible avenues to demand any policy correction. The implications for developing countries range from magnified informational problems, to widening information and analysis gaps between small and large developing countries, as well as emergence of developing country coalitions that continue to be constrained by limited technical expertise.

3. The capacity-building function, Dr. Carolyn Deere

Dr. Deere spoke of the broad political consensus with regard to the assistance required by developing countries to maximize the gains of their participation in the WTO. The rationale for the trade-related technical assistance and capacity building program (TACB) was to empower developing countries to engage more effectively in the multilateral trading system so that they reap a fair share of its political and social gains. In this respect, the TACB program focuses on fore core priorities: building supply-side capacity to benefit from new international trade opportunities, supporting the institutional infrastructure to implement WTO agreements, development-oriented legal and policy assistance to revise laws in order to meet WTO obligations, and also supporting strengthened participation in negotiations and decision-making processes. Since 1995, both the scale and the scope for TACB have expanded significantly. Nevertheless, some outstanding challenges remain, related to the fact that TACB is a donor-driven program. The first challenge pertains to the fact that there is a donor control over the resources. Indeed, despite a large increase in funding for TACB since 2002, resources still fall short of that which developing countries actually need to obtain benefits from their WTO participation. There is also an uneven commitment to multilateral TACB initiatives, as developed countries usually prefer bilateral agreements. Furthermore, TACB financing is subject to the vagaries of donor’s changing trade and foreign policy priorities; the reality is that most developed countries allocate resources according to their own national priorities. A second challenge is coordination and ownership constraints at the National level. This includes managing TACB from a host of different donors and dealing with short-term aid instead of long-term investments.

During the roundtable discussion, Ambassador Ismail commented on the importance of coalitions and the need for coherence in the WTO capacity-building process. He also said with regard to the TPRM, that it is also important that developed countries act as they should and respect their obligations vis-à-vis developing countries. Ambassador Maruping also commented on the TPR and said that it was imperative for the WTO to maintain its relevance. Ambassador Valles commented on the purpose of coalition formation, which he said was to establish an agenda that will benefit developing countries, as well as provide information and transparency. Mr. Jara spoke of strengthening negotiation power through coalition building, and suggested that the TPR should be open to the public in order to improve it. He also stated that the deficit in subsidies notification affects the developing countries in upholding their rights, and that capacity-building lacks resources. Lastly, Mr. Désir suggested to set up a parliamentary assembly in the WTO in order to facilitate understanding between the North and the South.

A series of questions were then taken up from the audience.

Restoring Morality to the Global Market

The workshop was made up of moderator Mr. Jean-Pierre Lehmann, professor of international political economy at the IMD and founding Director of The Evian Group; Mr. Ravi Kanth Devarakonda, Geneva editor of the Washington Trade Daily and Deccan Herald; Ms. Ximena Escobar de Nogales, Deputy Director and senior economic counselor at CASIN; H. E. Ms. Gail Mathurin, Ambassador and Permanent Representative of Jamaica; Mr. Aldo Matteuci, Senior fellow at the DiploFoundation.

Mr. Lehmann made some introductory remarks. He said that the global market economy hosts many injustices, and that the Doha Round was an opportunity to redress some of these injustices. He also commented on the importance of building coalitions in order to restore morality to the global market.

Mr. Matteuci’s presentation focused on the laws that govern the market, and not vice-versa. He reminded the audience that even Adam Smith’s economical theory of the invisible hand contained an element of morality to it.

Ms. Escobar de Nogales talked about consumer behavior. In particular, she focused on the importance of consumer behavior for developing countries and stated that the consumer must have an active morality in order to make a difference on the global market.

Mr. Devarakonda concentrated on the issue of patented drugs. He affirmed that two billion people lack access to essential medication at the moment, but the market was the ultimate arbitrator of price setting. This caused a moral dilemma, in the sense that people are dying because they do not have access to medicines, but these are protected by patents in Western countries in order to stimulate innovation. The current system of Compulsory License Mechanism tries to deal with this issue, but developing countries are sometimes prevented from using it, due to pressure from the drugs industry. So the question remained on how could one redress morality in this context. Mr. Devarakonda suggested to set up a global public pact, that would provide a code of conduct for extreme situations, where the market alone cannot be the sole decider.

Ambassador Mathurin’s intervention was concerned with who’s morality should guide the global market.

A series of questions were then taken up from the audience.

Coherent Strategies for Trade Liberalization – Bottom-up policies regional agreements and the WTO-system compatibility

The Session was composed of Moderator Mr. Frederik Erixon, Director of the ECIPE; Dr. Razeen Sally, Director ECIPE; Professor Patrick Messerlin, form the Groupe Economie Mondiale, Sciences po Paris; Mr. Huang Rengang, Minister Counsellor of China to the WTO; and Mr. Roderick Abbott, former Deputy Director-General of the WTO.

Mr Erixon made some opening remarks by asking whether there were some direct or indirect effects of different types of liberalization on the WTO system and what could one make of the new phenomenon of autonomous liberalization.

Dr Sally discussed medium-term strategic issues, including the multilateralization of regional agreements, the usefulness of having some rules agenda, as well as the acceleration of unilateral liberalization, particularly in Asia. He noted three changes from the GATT to the WTO: the agenda has broadened and deepened in scope, decision-making has widened beyond the original restricted club, and the WTO has become politicized by governments and infiltrated by anti-market NGOs. His conclusions for the mid-term future were that there should not be anymore WTO global rounds in the future, but only standalone negotiations, that special and differential treatment could not be left undifferentiated, and finally, that there should be a shift of focus from market access issues to rules issues.

Mr. Rengang began his presentation by reminding the audience that his country’s accession negotiations lasted fifteen years. He then discussed how the WTO system has helped China open up to international trade, to the point that its partners are now complaining that China is over-liberalizing, by exporting too much. Mr. Rengang also talked of the WTO system as a non-universal system, as many important countries such as Russia were not included in it, so its rule of law was limited in promoting trade liberalization. With regard to the Doha Round, the conclusion of the negotiations was not foreseen for the near future, so there was a strong probability that unilateral, bilateral and regional agreements were to continue as trade liberalization alternatives. He also discussed China’s policy of reducing tariffs on environment oriented imports before an actual binding agreement was reached in the negotiations, as a measure to maintain the coherence of the system.

Professor Messerlin pointed out that liberalization in the past few years happened mostly on a unilateral basis. He discussed the lack of leadership in international trade, and explained it through a more hostile public opinion, stronger anti-trade lobbies, and more absent businesses.

Mr. Abbott talked about regional agreements and the threat they represent to the multilateral system. He argued that the WTO system was not a universal one, pointing out to the exceptions provided in article 24, the provisions for weavers and the special regimes for developing countries. He therefore concluded that one should not be troubled if such great quantity of regional agreements are being negotiated. With regard to regional agreements, Mr. Abbott said that they were discriminatory, long-lasting and creating loopholes to WTO rules. He concluded his statement reiterating that it was a good idea to pursue multilateral negotiations and agreements in the future.

Globalization and the WTO Doha Agenda: Impact on Development

Speakers included Mr. Martin Khor, from the Third World Network; Mr. Mehdi Shafaeddin, former Senior Economist at UNCTAD; Ms. Anne Kamau, from the Permanent Mission of Kenya at the UN; H. E. Mr. Oscar Carvallo, Ambassador to the Permanent Mission of the Bolivarian Republic of Venezuela at the UN; and H. E. Ms. Gail Mathurin, Ambassador to the Permanent Mission of Jamaica to the UN.

The general discussion was centered on the issues contributing to the current deadlock in the Doha negotiations, namely agricultural issues, where developing countries have agreed to cut their tariffs further than in the Uruguay Round; industrial tariffs and the introduction of the Swiss standard formula, which means that developing countries have to reduce their tariffs much more than developed countries; negotiations on services; and the development issues, which have been left for the end of the Round, if time remains.

The discussion focused specifically on the development implications of industrial tariff cuts. It was argued that the contradictions in design and implementation of WTO rules and the inconsistencies between the Doha text and developed countries’ proposals triggered much of the current turmoil in the negotiations. The introduction of the Swiss formula in particular, went against the developing countries’ interests, while serving those of developed countries. The former would be subject to much greater tariff reduction rates, despite the fact that the principal of less than proportional reciprocity was agreed in Hong Kong. This would create significant detrimental long-term effects on the industrialization of developing countries, with no negative effects in the developed world, since industrialization has already occurred there. The developing world, by contrast, suffers from underdevelopment of its industrial sector. Thus, they need to apply higher tariffs to some of their industries, particularly new ones. Or with the low tariffs rates proposed, this will disarm them of an important policy tool for establishing new industries and upgrading old ones. The implications of such low and bound tariffs include the locking of the structure of production of most developing countries into primary commodities, simple resource-based and labor intensive products. The conclusion of the discussion highlighted the fact that development should not be sacrificed for the sake of reaching an agreement in the multilateral arena, nor should developing countries accept to be bullied into unfair trade agreements at the bilateral level.

R. M.