Trade Justice Update
Introduction
In theory, international trade is now regulated by the World Trade Organisation (WTO) which was set up in 1995. It now has 151 members, each with one vote, and its stated aim is the removal of barriers to trade in the hope that this is the best way to share wealth worldwide. It has a legal status similar to that of the United Nations in that its rules can be made legally binding on states: a Disputes Settlement Body has the power to impose fines and sanctions. This may sound fine in theory – and so it would be if all those 151 countries were equal in power and wealth, but of course they are not. In practice, the more powerful nations use the WTO to reduce barriers to exporting their goods to the less powerful ones, while maintaining their own import barriers.
The Trade Justice Movement (www.tjm.org.uk) seeks to bring pressure to bear on governments within the WTO to regulate trade in such a way as to benefit people throughout the world, and to protect the environment.
WTO Talks
In late July, 2008 the Doha Round of trade negotiations failed for the fourth time in a row - every end of summer, every year in the last four years, the Doha Round collapsed since its launch in November 2001 in Doha, Qatar. The July failure was blamed on US, China and India. The US favoured use of the Special Safeguard Mechanism (SSM), designed to help developing countries cope with import surges and price falls, only when agricultural imports surged above 40 per cent in volume. India and China wanted the mechanism to be triggered when imports rose by 10 per cent to protect small, poor farmers. The impasse between the three giants led the 10 days ministerial negotiations to collapse.
However, political and economic commentaries point to a range of issues as causing failure: that the Doha Development Agenda (DDA) was an ambitious, broad agenda; that the 'single undertaking' principle of WTO is problematic (which states nothing is agreed until everything is agreed) in which all 153 politically and economically diverse member nations must agree on everything on the negotiating table to achieve consensus.
Agriculture reform in the rich world is the most fundamental of these. The club of rich nations (US, EU, Canada and Japan), whose average industrial tariffs are below 5 percent amongst themselves, liberalised their industrial tariffs. However, they do not perceive that the benefits to reforming their agricultural trade, largely in favour of the developing world, is worth the political costs in their domestic constituencies.
Analysts have pointed to a new reality and changing global economic equation to put the persistent Doha failure in perspective. First, the US, EU, Canada and Japan are no longer able to 'buy up' a few developing countries with special sops, as has been the practice in the previous Rounds. The developing world led by India, China, Brazil and South Africa has remained united and refused to yield ground to powerful nations.
Also, since the launch of Doha, three things happened to reinforce the changing global economic scene: American global economic and political leadership has stumbled; China joined WTO (in 2001) and is on the way to becoming the world's biggest exporter; and economic expansion in China (annual average of 10 per cent GDP growth), India (around eight per cent) and Brazil (above three per cent) has been faster than any of the 'traditional industrial powers', many of which are now at the brink of recessions.
However, political and economic commentaries point to a range of issues as causing failure: that the Doha Development Agenda (DDA) was an ambitious, broad agenda; that the 'single undertaking' principle of WTO is problematic (which states nothing is agreed until everything is agreed) in which all 153 politically and economically diverse member nations must agree on everything on the negotiating table to achieve consensus.
Agriculture reform in the rich world is the most fundamental of these. The club of rich nations (US, EU, Canada and Japan), whose average industrial tariffs are below 5 percent amongst themselves, liberalised their industrial tariffs. However, they do not perceive that the benefits to reforming their agricultural trade, largely in favour of the developing world, is worth the political costs in their domestic constituencies.
Analysts have pointed to a new reality and changing global economic equation to put the persistent Doha failure in perspective. First, the US, EU, Canada and Japan are no longer able to 'buy up' a few developing countries with special sops, as has been the practice in the previous Rounds. The developing world led by India, China, Brazil and South Africa has remained united and refused to yield ground to powerful nations.
Also, since the launch of Doha, three things happened to reinforce the changing global economic scene: American global economic and political leadership has stumbled; China joined WTO (in 2001) and is on the way to becoming the world's biggest exporter; and economic expansion in China (annual average of 10 per cent GDP growth), India (around eight per cent) and Brazil (above three per cent) has been faster than any of the 'traditional industrial powers', many of which are now at the brink of recessions.
What you can do
- You can send an email to the International Development Secretary through Christian Aid, Tearfund or Traidcraft. For details see the Trade Justice Movement website.
- Write to your MP or your MEP and ask him or her to pass your letter on to Peter Mandelson, the EU Commissioner for Trade. Ask him (1) to remember when negotiating in the WTO that the Doha Round was intended to benefit the developing world, not the EU. (2) to ensure that any new Economic Partnership Agreements in fact be a partnership for development, not a free trade time bomb. Demand that the EPAs already agreed be monitored for their impact on the developing countries which have signed them.
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If you want to take the matter further, have a look at the following Oxfam paper:
A Matter of Political Will
Economic Partnership Agreements
The other topic of acute concern to Trade Justice campaigners has been the Economic Partnership Agreements between the EU and the group of 79 African, Caribbean and Pacific countries (ACP). The need for such agreements arose from the challenge made in the WTO to long established agreements between the EU and the ACP which has offered a degree of protection for the exports – such as bananas and sugar – from the ACP countries, most of which were former European colonies. In December 2007 35 ACP countries bilaterally or sub-regionally signed agreements, although only a group of Caribbean countries (CARIFORUM) signed a full agreement. The agreements require trade liberalisation – the removal of tariffs - in return for continued entry for ACP goods into EU markets. There has been much criticism of the way these agreements have been pushed through under threat of the total removal of protection and diminishing levels of aid. This approach has resulted in rushed deals, removing the opportunity for appropriate expert or public scrutiny as well as debate of the content either in ACP countries or Europe.
The deals agreed could pose a major threat to development in the countries concerned. Many ACP governments were put in the impossible position of having to choose between supporting existing livelihoods and industries now or retaining the ability to support industries that may emerge in future – a policy choice that Europe itself made during its development. Although the EU’s stated objective was that EPAs would lead to increased regional integration in ACP countries, the fact that the agreements have been made with individual governments or handfuls of countries can only weaken existing indigenous regional integration processes.
Unease with the composition of the EPAs has been expressed by African countries. A meeting took place at Addis Ababa, on April 3 2008, of trade ministers from members of the African Union (AU). They drew up a declaration which expressed their concerns about the EPAs which were signed in December 2007, “in order to avoid trade disruption”.
They called upon the AU to draw up a template, to serve as a guide, so that negotiators could harmonise full EPAs in order to safeguard regional integration. They also wanted recognition that there are contentious issues in the current EPAs and that these need to be renegotiated. The African countries asked the European Union (EU) to respect the commitment that “no ACP country should be made worse off” by the new agreements, and to provide adequate resources to meet adjustment costs. They called upon both AU and EU negotiators to establish effective monitoring and evaluation of the implementation of EPAs.
The Trade Justice Movement (tjm.org.uk) is calling for a revision of the existing agreements, in particular to avoid damaging regional integration, and for an effective review and monitoring process. For those countries which have not yet signed an agreement, a more development friendly approach must be taken by the EU. SA refused to sign an agreement because of the EU's "unreasonable" demands about inclusion of issues such as the obligation to negotiate the liberalisation of trade in services. South Africa’s deputy trade minister has declared that . "If not amended, the economic partnership agreements will become another obstacle which developing countries will have to overcome on their path towards development."
The deals agreed could pose a major threat to development in the countries concerned. Many ACP governments were put in the impossible position of having to choose between supporting existing livelihoods and industries now or retaining the ability to support industries that may emerge in future – a policy choice that Europe itself made during its development. Although the EU’s stated objective was that EPAs would lead to increased regional integration in ACP countries, the fact that the agreements have been made with individual governments or handfuls of countries can only weaken existing indigenous regional integration processes.
Unease with the composition of the EPAs has been expressed by African countries. A meeting took place at Addis Ababa, on April 3 2008, of trade ministers from members of the African Union (AU). They drew up a declaration which expressed their concerns about the EPAs which were signed in December 2007, “in order to avoid trade disruption”.
They called upon the AU to draw up a template, to serve as a guide, so that negotiators could harmonise full EPAs in order to safeguard regional integration. They also wanted recognition that there are contentious issues in the current EPAs and that these need to be renegotiated. The African countries asked the European Union (EU) to respect the commitment that “no ACP country should be made worse off” by the new agreements, and to provide adequate resources to meet adjustment costs. They called upon both AU and EU negotiators to establish effective monitoring and evaluation of the implementation of EPAs.
The Trade Justice Movement (tjm.org.uk) is calling for a revision of the existing agreements, in particular to avoid damaging regional integration, and for an effective review and monitoring process. For those countries which have not yet signed an agreement, a more development friendly approach must be taken by the EU. SA refused to sign an agreement because of the EU's "unreasonable" demands about inclusion of issues such as the obligation to negotiate the liberalisation of trade in services. South Africa’s deputy trade minister has declared that . "If not amended, the economic partnership agreements will become another obstacle which developing countries will have to overcome on their path towards development."
Partnership or Power Play?
In April Oxfam published a very detailed analysis of the one full and the interim EPAs which have been initialled, called Partnership or Power Play? How Europe should bring development into its trade deals with African, Caribbean, and Pacific countries. In the introduction, the report points out that “A true partnership in trade could radically transform the lives of one-third of all people living in poverty, providing farmers and small businesses with sustainable incomes and workers with decent jobs.”
Oxfam’s view is that Europe is choosing power politics over partnership”. The report says that ”the deals currently on the table will strip ACP countries of important policy tools they need in order to develop. They will fracture regional integration, exacerbate poverty and make it harder for countries to break away from commodity dependence.” Oxfam points to the resistance which many ACP countries are demonstrating to signing unfair agreements in haste, and calls on Europe “to rethink, and agree to change course." The report concludes, “it is in its own interests to do so.”
Oxfam’s view is that Europe is choosing power politics over partnership”. The report says that ”the deals currently on the table will strip ACP countries of important policy tools they need in order to develop. They will fracture regional integration, exacerbate poverty and make it harder for countries to break away from commodity dependence.” Oxfam points to the resistance which many ACP countries are demonstrating to signing unfair agreements in haste, and calls on Europe “to rethink, and agree to change course." The report concludes, “it is in its own interests to do so.”
