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Cards always stacked against the poor

Developing nations never had a chance in a round was meant to be about them, writes Stuart Biggs

South China Morning Post Ltd. | December 18, 2005 Sunday

The Doha Development Round of WTO negotiations was supposed to be precisely that - a chance to put the needs of developing nations at the centre of trade reforms in a bid to ease poverty and provide increased opportunities for the world's poorest.

But with negotiations stuttering into the final day and NGOs fighting for workers' rights, farmers in developing countries say the talks have been hijacked by self-centred rich nations.

"This was supposed to be a unique opportunity to put the needs of developing countries at the centre of international trade negotiations," said Aftab Alam Khan, head of ActionAid's trade justice campaign. "But what we see is anti-development in that some of the proposals could be devastating for farmers and labourers in the developing world."

The trade spat between the EU and US over the size of domestic agriculture subsidies has dominated media coverage all week. This concentration on rich countries may belie the name of this round of talks but it is not entirely inappropriate as the EU and US are considered two of the worst offenders, distorting global agriculture prices through their domestic industry support mechanisms.

A far greater problem, according to Mr Khan, is that the media often misses the significance of the two sides' proposals and their potential to harm developing countries.

ActionAid's Trade Invaders report, published ahead of this week's meetings, illustrates the impact trade liberalisation can have, such as the closure of 20 textile factories in Nigeria thanks to the removal of tariffs on imports and 500,000 people in South Africa having their water cut off for failure to pay bills after privatisation.

These examples show that despite the rhetoric about the benefits of free trade, the real impact of liberalisation varies greatly across different sectors of the developing world, Mr Kahn said. The danger was that when the EU and the US demanded further access for services as a precondition of reducing sky-high agricultural subsidies, developing countries would lose out in a round that was supposed to be all about them.

"Originally the developing countries were told that if they accepted an agreement on Trips [trade-related aspects of intellectual property rights] they would get a reduction in agricultural subsidies in exchange, but now they are being told they must also accept an agreement on NAMA [non-agricultural market access]," Mr Kahn said.

"So in effect the poor countries are being asked to pay twice for the same thing."

Of course, closures of textile factories also occur in the developed world and so are not in themselves indicators of unfair trade. Meanwhile, trade libertarians argue that on a level playing field opportunities will arise in other sectors even as old staples close down.

But Mr Kahn said the key issue was that poor countries were being asked to grant free market access too early in their development.

"The US is asking for drastic cuts in tariffs but this is a direct contradiction to what they did during their own era of industrial development. In the 1950s industrial tariffs were 23 per cent in Great Britain and 15 per cent in the US - the average industrial tariff in developing countries in 2001 was only 8.1 per cent," he said.

"Poor countries must have a right to protect their own policy space and make their own decisions about which ... policies they adopt. They should be allowed to opt out of attempts to liberalise health care or water provision if the end result could mean [their populations being deprived of essential services]."

The argument is clearly that the onus should remain on rich countries to concede some of their bargaining chips on agricultural subsidies without pre-condition in order to help the developing world.

Instead, according to a recent Oxfam International report: "Talks have degenerated into a game in which rich countries compete to offer the fewest concessions while extracting as many concessions as possible from poorer members."

With so little on offer from the EU and the US, the report warned developing countries could be put in an untenable position of agreeing to harmful trade concessions or another stalled round of talks that risks marginalising the WTO.

But Walden Bello, executive director of Bangkok-based Focus on the Global South, suggested the collapse of talks may not be a bad thing for the developing world which had little to gain the way negotiations are currently set up.

Using the example of the General Agreement on Trade in Services, he said rich countries had hijacked the talks and imposed a system of mandatory "benchmarking" and "numerical targets" to increase trade concessions from developing countries where previously they had a right to choose individually the sectors to liberalise.

"As the developing countries have rightly perceived, mandatory negotiations [are] the first step on the slippery slope to mandatory liberalisation," Mr Bello said.

Describing the Doha Development Round as "a malicious misnomer", he said the collapse of talks in Hong Kong would actually be a positive development.

"Contrary to the self-serving doomsday scenarios painted by its corporate supporters, there is life after the WTO. Its demise would create not anarchy but policy space for development," he said.

At the heart of the argument against the current round of negotiations lies a widespread perception that rich countries are insincere in their efforts to reform international trading rules for the development of poorer nations.

That perception is likely to remain the longer the US and the EU haggle over dollars and euros while so much of the developing world remains in poverty, particularly when both parties are suspected of spouting fallacies about the improvements their most recent proposals would bring. Even in the absence of a deal today, the developing world can take heart from this week's conference via Friday's display of unity by 110 developing nations. It should now be clear to the US and EU they face formidable opposition and if they remain true to the purpose of the Doha Development Round they should respond with more significant offers and concessions.

Whether that happens remains to be seen because with a single vote enough to derail the proceedings, any overall consensus may depend on who needs a deal more.

But there is plenty of support for the developing world to continue to make a stand as at Cancun.

"If the final draft in Hong Kong is anything like the one [entering the talks], we would urge developing countries to reject it," Mr Kahn said.

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