Multinational Monitor

DEC 2001
VOL 22 No. 12


Corporations Behaving Badly: The Ten Worst Corporations of 2001
by Robert Weissman and Russell Mokhiber


Report from Doha: Intrigue at the WTO, as Developing Countries Try to Keep Their Heads Above Water
an interview with
Cecilia Oh


Behind the Lines

Assault on Democracy - In Memorium: John O’Connor

The Front
Mahogany Buyers Stumped - Lord of the Fries

The Lawrence Summers Memorial Award

Names In the News

Book Notes


Report from Doha: Intrigue at the WTO, as Developing Countries Try to Keep Their Heads Above Water

An Interview with Cecilia Oh

Cecilia Oh is a researcher with the Third World Network. She works in Geneva, following developments at the World Trade Organization (WTO), particularly related to intellectual property. The Third World Network is an independent international network of organizations and individuals involved in issues relating to development, the Third World and North-South issues. Its international secretariat is based in Penang, Malaysia.

Multinational Monitor: What is your assessment of the Doha Declaration, the statement issued by negotiators at the conclusion of the World Trade Organization (WTO) meeting in Doha, Qatar this November?

Cecilia Oh: It sets out a menu for future negotiations, though there is some complication about how they will proceed.

If you look at the Doha Declaration as a whole, what you see is an overall approach that includes negotiations on services and agriculture; new negotiations on industrial tariffs, and the implementation issues that were being asked for by the developing countries. There is also reference to negotiations on some aspects of trade and the environment. Then there is a work plan for discussions about the “Singapore issues” — investment, competition, transparency in government procurement and trade facilitation. So the work program looks like it will be carried out on a two-track basis. On the one hand there will be negotiations on implementation, agricultural and service issues, as well as the new issues of environment and industrial tariffs; and then there will be discussions on modalities of the Singapore issues on the other hand.

It’s clear from the text of the Declaration that negotiations on the Singapore issues have not been launched. The Declaration states quite clearly that there needs to be explicit consensus on the modalities before negotiations on these issues can commence after the fifth ministerial conference in 2003. In the closing plenary at Doha, the chairman stated his understanding that before negotiations can start, there must be explicit consensus on the issue of negotiations itself, and not only on the modalities of the negotiations.

It’s going to be very interesting in the next few months and coming years to see how the WTO membership lines up: How will the discussions on these issues be conducted? How will countries prepare to get the negotiations launched or to try to stop a launch?

Multinational Monitor: On agriculture, it seemed that the United States in particular was pushing for some kind of statement to push the negotiations forward; the European Union and Japan were resistant; and the developing countries had a third position. Where were all those countries coming down and who ended up winning?

Oh: If you believe what U.S. Trade Representative Robert Zoellick and Pascal Lamy of the European Union are saying, then everyone has won. But I think the divisions were largely between the U.S. and the EU in terms of phasing out export subsidies. There’s a perception that the Declaration committed WTO members to liberalize the agricultural sector; but if you actually look at the Declaration, it includes a phrase that Members do not prejudge the outcome of the negotiations. It’s going to be a battle to see how this provision is going to be interpreted and whether the EU uses this provision to stop real progress on the phasing out of export subsidies.

Developing countries were also divided on agricultural issues. You had the Cairns group, which includes several developing countries, especially from Latin America. The Cairns group supported full-fledged liberalization.

Then you had most of the other developing countries, including India and many African countries, which wanted to ensure their rights and ability to protect their own farmers from the threat of being swamped by cheap food imports, and at the same time, wanting the developed countries to phase out their subsidies. I would expect that the EU’s going to fight that.

Multinational Monitor: From the Like-Minded Group and African countries the position basically was in support of an end to export subsidies but trying to protect domestic markets?

Oh: What developing countries were trying to do was to say, “Look, in terms of the imbalances in terms of the agricultural agreement, one thing we can all agree on is the elimination of export subsidies.” If you stick to the ideal of no trade distortions in the agricultural sector, then export subsidies, which are very high in developed countries and which are probably the greatest trade distortion, should be eliminated. Developing countries agreed on this point.

When it came to looking at the domestic side of things, developing countries have been fighting for the concrete recognition of special and differential treatment for them, so that they can have sufficient flexibility to protect farmers and their livelihoods, and promote food security. Some aspects of these are reflected in the declaration, but developing countries will face a tough challenge ahead to obtain concrete concessions in the negotiations. For example, as a concrete measure, the Third World Network has proposed that developing countries should be exempted from the disciplines of import liberalization and domestic subsidy with respect to food produced for domestic consumption and with respect to the produce of small farmers.

Multinational Monitor: What are the concerns of developing countries about export subsidies?

Oh: It goes back to the structure of the existing agricultural agreement. High export subsidies (and also the high domestic subsidies) allow developed countries to price their food exports artificially low. This displaces developing country farmers, who cannot compete with the subsidized imported food.

Multinational Monitor: You mentioned that developing countries were focused on the implementation issues. What are the implementation issues?

Oh: The phrase itself came out of process prior to and at the Seattle ministerial conference when developing countries said they were having problems implementing existing agreements from the Uruguay Round [the negotiations which created the WTO in 1995]. They said, for example, provisions in the intellectual property agreement requiring that they implement patents on life forms or patent or patent-like protections for plant varieties would have adverse implications for them.

Another aspect of the implementation problem was that developed countries were not implementing their WTO obligations. Developing countries pointed to several examples, such as the continued protection of agriculture and textiles, and the non-implementation of article 66.2 of the intellectual property agreement, which stipulates that developed countries should provide incentives for technology transfer to developing countries. After the Seattle ministerial conference, the developing countries listed about 140 bullet points highlighting problems with the existing Uruguay Round agreements. They said they needed action on these problems before they would go into negotiations on new issues or even think about having agreements on new issues.

Multinational Monitor: You also mentioned the Singapore issues. What are those, and why are developing countries wary of that agenda?

Oh: If you tried to summarize the concerns of developing countries with regard to the Singapore issues of investment, competition and transparency, you could say that they were worried about the effect these issues might have in limiting the ability and the right of developing countries to formulate development policies and strategies.

Take the investment issue, for example. The argument for an investment agreement is that it would increase foreign direct investment (FDI) in developing countries. Developing countries are skeptical about this. They know about the Multilateral Agreement on Investment and some of the substantive issues that arose out of the campaign against it. What they saw being proposed in the WTO was more or less the same thing.

They started to look at the implications of a new investment agreement for them in terms of their ability to regulate investment flows into their countries. They worried about the proposed agreement giving unprecedented rights to foreign investors, such as rights to sue governments for loss of future profits due to government regulations — a feature of NAFTA that is increasingly being invoked. Developing countries saw these provisions as an encroachment on a government’s ability to decide on how to regulate FDI, on their ability to channel FDI into sectors of interest to them. They may not want foreign investment in a particular sector that is already developing with domestic firms, or there may be sensitive factors so that they may not want foreign control in certain sectors such as farming, housing, mining, water supply or the media, for example. They are concerned that an investment agreement would prevent or severely limit their ability to exercise these controls.

Multinational Monitor: Why are the developing countries wary of a competition agreement? Wouldn’t it help them to have more enforcement of antitrust rules internationally?

Oh: Competition at face value sounds like a good thing. But developing country concerns arose from a European Commission proposal which talked about promoting and enabling foreign companies to have the right to compete equally with small local companies, which means putting an end to policies and practices that favor or give an advantage to local firms in the interest of building up domestic businesses and firms. That got a lot of people thinking about how a competition agreement in the WTO would adversely affect local firms and businesses. They are concerned that a competition agreement, based on the EU’s concepts and motivations, would lead to the problem of multinationals coming in and perhaps wiping out the small locally owned companies.

Another developing country reason for not wanting negotiations on competition was the need to first build capacity to understand the issue, and then to have a national infrastructure to deal with competition issues — both prior to commencing any negotiations, let alone having multilateral rules.

Most developing countries do not yet have competition laws or policies. They are worried that a WTO agreement would impose obligations on them to have a particular model of competition law and policy, which would, ironically, enable foreign firms to monopolize their economies whilst rendering small, local firms uncompetitive.

Multinational Monitor: Is it the case that the EU was pushing much harder on the Singapore issues than the United States?

Oh: The general feeling in Doha was that the European Commission was playing a much higher profile role than the U.S. In terms of investment and competition issues, it was clear that the EU had been quite aggressively pushing these issues. At the Doha conference itself, the European Commission became the spokesperson for the developed countries, pushing even more aggressively than the United States.

Multinational Monitor: A separate declaration was issued on the intellectual property agreement (TRIPS — trade-related aspects of intellectual property) and public health. What is in that declaration and what does it mean?

Oh: Some people say it’s only a political declaration, and that therefore it’s not a big deal. In terms of the clarification that’s been offered, it adds nothing new in terms of additional rights for developing countries. Other people emphasize that the declaration — which states that the TRIPS agreement should be interpreted to be compatible with public health — has binding force and will be a guide to future dispute panels when they interpret the TRIPS agreement.

I tend to agree with the latter assessment in the sense that the Declaration is both a political declaration and a legal declaration. The ministerial conference is the supreme body in terms of a WTO agreement. When the ministers come out with a declaration saying the TRIPS agreement should not prevent countries from taking measures to protect public health, that is a guide in terms of interpreting the TRIPS provisions.

This is the first step. The declaration gives developing countries the green light to use the flexibility in the TRIPS agreement to take measures like compulsory licensing [to authorize generic competition for on-patent products such as pharmaceuticals].

The next important step will be for these developing countries to implement these measures at the national level, now that they have an assurance that nothing untoward is going to happen to them as a result. That next stage should hopefully come soon, and I think there should be a lot of support from civil society organizations for developing countries to take this step.

Multinational Monitor: How is the notion of special and differential treatment — that the WTO agreements should apply differently to developing countries — being applied?

Oh: If you look at the WTO agreements, the special and differential treatment concept has been limited in scope and in enforceability. In many cases, developing countries are only given more time toimplement their WTO obligations.

Special and differential treatment should be defined as the right of developing countries to take measures that are best suited to national interests.

This could, for example, take the form of being able to implement the TRIPS agreement in a flexible manner in terms of interpreting the provisions of the agreement and choosing the interpretation that will best suit their national interest, the interests of the farming community, the indigenous community and so forth.

It should establish developing countries’ ability to implement provisions in the WTO agreements with maximum flexibility. For example, since developing countries are at a lower stage of development, they should be allowed to have a correspondingly lower level of obligations than the developed countries. This means that they should be allowed higher levels of protection to ensure the survival of their local farms and firms. In the case of intellectual property protection, they should not be obliged to implement such high levels of protection as required by the TRIPS agreement.

Multinational Monitor: Does the concept still have vitality, or has it been reduced to the idea that developing countries can implement WTO rules according to a different timetable?

Oh: I think that when the WTO membership begins on this new work program, they will find that it imposes a very heavy burden on the developing countries, not just in terms of the capacity to negotiate but in terms of future obligations, and that it cannot realistically be implemented by developing countries because it will reduce or severely constrain their development possibilities.

Then the idea of special and differential treatment — hopefully the expanded version of special and differential treatment — will be essential.

All of this goes back to what the WTO was meant to do. The stated objective of the WTO is not liberalization but sustainable development and promoting higher standards of living. If you go back to that objective, then developing countries must be given the flexibility to ensure that the WTO rules and their implementation allow them to have development and growth.

Multinational Monitor: How would you say the developing countries as a group did in Doha?

Oh: As compared to Seattle, the developing countries entered Doha much more prepared in terms of understanding the issues and in terms of their political resolve to say no to the issues they felt were not suitable for negotiations.

Most developing countries in the lead-up negotiations in Geneva were very clear: they did not want the launch of a new round or the introduction of new issues onto the negotiating agenda of the WTO. In Geneva, many developing countries took great pains to make it clear to the WTO secretariat and the general council chairman that they did not want negotiations on the Singapore issues and on industrial tariffs.

However, to their dismay and frustration, their views were not at all reflected in the draft declarations produced in Geneva by the general council chairman and the director-general. Despite their objections, the draft declaration was taken to Doha. This was a most undemocratic document, considering that it did not reflect the views of many developing countries, and it put the developing countries in a position of great disadvantage right from the start.

The negotiating processes in Doha made things worse. Facilitators had been selected to facilitate negotiations, and they were allowed to decide on the procedures for consultations and drafting. The facilitators were also chosen from the same camp — those countries that wanted a new round.

You also had at Doha the revival of the green room [where a limited number of countries negotiate in secret]. There were about 24 ministers who were invited to the green room. The big green room started on the 13th of November, the final day of the Ministerial meeting, at 6:00 p.m. and finished sometime around four or five in the morning. Twenty-four countries were invited into the green room, so the 120other countries were excluded from the negotiations.

Many of the developing country ministers who were negotiating may not have been as familiar with the issues or the political realities of the negotiations as some of their negotiators in Geneva, or as compared to the technical capacity of the EU’s Pascal Lamy and U.S. Trade Representative Robert Zoellick. So just in terms of technical abilities and capacity, the ministers from the developing countries were at a great disadvantage.

There were reports that the developed countries were better prepared for the green room process. They had relays of people going in and out to replace each other. It was like a baton race for the developed countries, whereas the developing countries had the minister and one adviser who had to sit through from the afternoon until four in the morning, so it required a combination of technical ability and ability to withstand fatigue.

Moreover, some of the developing countries that opposed the new issues were reportedly put under great pressure by the major developed countries.

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