No Go

The South managed to make its presence felt, but this was due to the US-Europe rift

Published: Friday 31 December 1999

No Go

-- (Credit: Greg Gibson / AP Photo)Some of the chaos outside seemed to permeate into the Convention Center. It was just another day before attention shifted from the protests outside to the proceedings of the meet, and differences between political groups within the wto began to emerge. There were three main groupings: the us, the European Union (eu), and the developing countries. And then there were countless non-governmental organisations (ngos) with a common complaint that global trade rules were given precedence over concerns regarding the environment, health, human rights and countless other matters. The role of Northern NGOs
So prominent was their presence that the possibility of ngos being included in the next round of wto talks to be held in Geneva in 2000 is being considered, especially by usa, which was pleased to hear its opinions reflected in the statements of us ngos. However, the stance adopted by the government of India on the issue of ngo participation was ambiguous. This could go against the interests of the country if the us does succeed in incorporating the support of ngos at wto meets. A case in point is the shrimp and turtle controversy in which the World Wide Fund for Nature played a major role. The Indian government fears that Western ngos may reflect certain environmental concerns which, if linked to trade agreements, may give the North the power to impose their environmental standards upon developing nations. This may make it impossible for developing nations to engage in global trade.

In Seattle, ngos from the North, though fighting capitalism, were in fact creating hurdles for the poor nations. By pressing for inclusion of environment and labour clauses in trade talks, they were demanding changes that would adversely affect the trade interests of developing countries (see Editor's Page: International pressure and the civil society ).

The view from the South
Disillusioned by the promises made at the Uruguay Round of talks, developing countries were calling for a 'turnaround' to review the agreements made then, and their impact. The Uruguay Round lasted from 1986 to 1994 and culminated in the establishment of the wto on January 1, 1995.

The Uruguay talks had resulted in several legally-binding agreements that required developing countries to make drastic changes in their domestic economies in areas such as services, agriculture, intellectual property and investment measures. Many developing countries did not have the capacity to follow the negotiations, and did not understand what they had really committed themselves to. The agriculture agreement, for instance, calls upon them to reduce domestic subsidies to farmers and remove non-tariff controls on agricultural produce, converting these to tariffs and then progressively reducing these tariffs. This would have imposed global competition on their respective domestic farm sectors.

Besides, in its list of new items for the wto agenda, the eu has an investment agreement to prevent countries from discriminating against foreign investment, along the lines of the controversial Multilateral Agreement on Investment negotiated by the countries of the Organization of Economic Cooperation and Development (oecd). It was abandoned last year following massive public opposition. The negotiation of such an agreement under the wto has also been opposed by developing countries. The group of 'like-minded' developing countries, including India, Pakistan, Cuba, the Dominican Republic, Egypt, Honduras, Indonesia and Malaysia, wanted wto obligations for poor countries to be slowed, with greater access to industrialised country markets.

The EU-US standoff
Both the us and the eu wanted to expand the scope of present agreements but differed over what should be included in the Seattle round of talks, touted as the 'Millennium Round', particularly by the eu. While the us wanted to focus on a short list of areas of its own interest, the eu wanted a broader round, including new areas such as investments. The us and eu position was largely similar. But the differences emerged in the area of agriculture and biotechnology.

One eu source told The Guardian : "We think our approach has a much better chance of flying than that put forward by the us." Voicing equal optimism, Pascal Lamy told the Wall Street Journal that the proposals made by the eu were "gathering momentum", having won the support of some Asian countries and eu-applicant countries such as Turkey. Even before the first day of talks was over it was clear that the us would have to soften its stand on the labour standards issue with developing nations threatening to walk away from the talks.

The murky picture
When the trade talks collapsed, most leading national dailies termed it a " pr disaster" for president Clinton. But, more importantly, why did the talks fail? "Essentially the vested interests were simply too strong. There is a shift in the world power structure, which the Western negotiators had failed to recognise. The days when Asian, South American and other Third World countries could be ignored are coming to an end," noted The Guardian . And this time round, the developing nations were determined to make their presence felt (see box: Allegations of being sidelined ).

There were several issues over which the developing nations were at loggerheads with the us, most notable among them being biotechnology, agriculture and labour standards for trade. Developing countries also claim that they are losing competitive advantage in trade because their goods are denied access to markets in industrialised countries. Their view was substantiated in the 1999 Trade and Development Report of the United Nations Conference on Trade and Development (unctad). The report stated: "If the North removes its protection, developing countries would have a competitive advantage which could lead to increased exports of us $700 billion in a relatively short time."

Till the end, the industrialised nations could not persuade the developing countries to change their stance over the controversial issues leading to a deadlock, and discussion on each issue was plagued by the clash of interest of the three major blocks.

Agriculture: In the area of agriculture, the us was supported by agricultural exporters and the Cairns group, comprising Argentina, Australia, Bolivia, Brazil, Canada, Chile, Columbia, Costa Rica, Guatemala, Indonesia, Malaysia, New Zealand, Paraguay, the Philippines, Thailand, South Africa and Uruguay. Together, they wanted elimination of all export subsidies for agriculture, reduction in domestic agricultural subsidies, reduced tariffs on agricultural goods and stronger "disciplines" on state-owned food-trading enterprises.

But the eu, which provides larger subsidies to small farmers and heavily subsidises agricultural exports, resists the us thrust. Developing countries, meanwhile, see the us demands as a threat to their food security, and demand "special and differentiated treatment" in agricultural trade, with rights to maintain internal price supports and higher tariffs than richer countries.

Services: The us also wants to expand the scope of the existing General Agreement on Trade in Services ( gats ) to include telecommunications and finance. It also wants gats to include travel and tourism, education and training, professional services and health, and an agreement on e-commerce under wto . But the one area that was likely to pose a serious threat to developing countries came from the us wanting to include negotiations on biotechnology under the wto .

Biotechnology: The us has been opposing talks on a biosafety protocol under the Convention on Biological Diversity ( cbd ), which could end up restraining the us biotechnology industry. Such a protocol would call for recognition of the precautionary principle, banning trade in biotechnology on grounds that it could cause potential harm to human health and the environment, and would recognise the right of any country to say no to the imports of genetically modified food ( gmo s). It would also establish a liability clause, holding corporations responsible for any potential harm caused by genetically modified products, and recognise the right for countries to establish labeling schemes.

Instead, the us wanted biotechnology trade to be covered under the wto, which was more likely to be sensitive to their trade concerns rather than the cbd. This move was vociferously opposed by the eu before the Seattle meeting. Haunted by a series of food scandals in the past couple of years, including the beef hormone case under the wto (see box: Hormone beef or not), citizens' groups within the Union had made it clear that they were opposed to negotiating on biotechnology under the wto. This position was shared by developing countries.

However, these countries were in for a shock at Seattle when the eu commissioner Pascal Lamy suddenly spoke in favour of biotechnology negotiations under the wto. eu ministers present at the meeting first heard of the change in the eu's position from civil society groups, and were as taken aback as developing countries. As many of the ministers openly declared that they neither knew of nor endorsed the eu's turnaround, Lamy is said to have requested them to withhold their objections for fear of derailing the entire ministerial declaration. As expected, rumours over what the eu got in return for the biotechnology deal were rife.

Related to biotechnology was also the issue of Trade Related Intellectual Property Rights (trips), an agreement that is in direct conflict with the cbd. As in the past, developing countries called for international recognition of traditional knowledge as protectable subject matter, or even a revocation of patents on life forms. These countries also wanted essential drugs to be excluded from the Intellectual Property Rights (ipr) rules.

Row over labour: The us was determined to include labour standards in the global trading framework. As British sources told The Guardian : "The problem is that the us has to have a headline by the end of the week which includes the words ' wto ' and 'labour standards'."

This was evident in the uncompromising message put forth by president Clinton when he addressed the conference on December 1. The president said, "What we ought to do first of all is to adopt the us position on having a working group on labour within the wto, and then that working group should develop these core labour standards, and then they ought to be part of every trade agreement."

In total disagreement, India, spearheading the opposition against the inclusion of labour in trade talks, refused to accept wto jurisdiction over the rights of workers.

However, in this regard, the stance adopted by the uk was comparatively flexible. Under the compromise deal that it put forward, wto would have to work along with the International Labour Organization (ilo) and the World Bank to establish a forum to deal with labour issues. Although the eu suggested setting up a joint forum comprising the wto and ilo, uk trade and industry secretary Stephen Byers wanted the World Bank to be included in the committee as well. Talking to The Guardian , British officials said that inclusion of the World Bank would quell fears in impoverished nations that they are being penalised for being poor.

Geneva, the next battle for the South

It is quite clear that the developing countries have a lot to lose in global trade negotiations. The scene of the next North-South battle will be Geneva, Switzerland, where a fresh round of wto talks will be held in the year 2000. The contentious issues will not go away, and governments and the civil society of the South will have to deal with them. And if the South has a lot to lose, the powerful North can only gain substantially.

The North will certainly try its best. There will be another round of lobbying, of backdoor alliances, of trying to prevent the South from putting up a united defence. Yet it is the responsibility of Southern governments to safeguard the interests of its people.

Another threat before the South is the resolution of disputes between the us and the eu. If these two giants come together, the South will struggle to get a word in the edgeways while the discussions proceed. All the more reason for the South to be prepared. The planning and the strategy that worked for the South in Seattle will probably not work in Geneva. And it is highly unlikely that the Swiss capital will allow a repeat of the kind of protests that Seattle will be remembered for. As global trade is an inevitability and there is a lot to lose and gain, it is time the Southern leaders returned to their work tables to do their homework for Geneva.

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