The Doha Development Agenda The Road Ahead

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					The Doha Development
Agenda: The Road Ahead
        Pradeep S. Mehta
The Doha Development Agenda: The Road Ahead




The Doha Development Agenda:
       The Road Ahead
                                              Pradeep S. Mehta1




Introduction                                     ral WTO Ministerial Meeting held in
                                                 1996 in Singapore witnessed an
Despite deep domestic reforms                    expansionist agenda unabashedly
and hectic negotiating efforts at                pushed for by the developed coun-
the General Agreement on Tariffs
and Trade and the World Trade
Organization (GATT/ WTO) trade                    “The TRIPs does not involve mutual gains; rather, it
talks, developing countries have
                                                  positions the WTO primarily as a collector of
been unable to fully integrate into
the multilateral trading system. The              intellectual property-related rents on behalf of
Uruguay Round Agreements (URAs)                   multinational corporations.”
reached in 1994 are perceived by                                                   Economist Jagdish Bhagwati
developing countries to be unequal
and unfair to their interests. This
imbalance is attributed, among other
things, to the Agreement on Trade-               tries. The 1996 meeting led to the
Related Aspects of Intellectual                  creation of three working groups
Property Rights (TRIPs) and similar              on Government Procurement,
“trade-related” issues that were added           Competition, and Investment, with a
to the trade agenda.                             caveat that negotiations on the latter
                                                 two issues would be launched only
   Following the Uruguay Round of                after an explicit consensus. These
trade negotiations, the World Trade              items, together with Trade Facilitation,
Organization (WTO) was launched in               would become known as the contro-
January 1995. Its mandate calls for the          versial “Singapore issues”.
WTO to provide a forum for trade
                                                    The second Ministerial in Geneva
negotiations; settle trade disputes;
                                                 in 1998 was merely a token one, cele-
monitor national trade policies; and
                                                 brating the golden jubilee of the GATT.
offer technical assistance and training
                                                 The Ministerial Meeting in Seattle in
for developing countries. The inaugu-


                                                                                           11
                                                                              Canadian Development Report—2003




                  December 1999 was the focus of                        It is still too soon to assess the
                  vociferous anti-trade protests and                 development outcomes of the Doha
                  sparked great controversy. The Seattle             agenda commitments. There is a sense
                  talks failed to come to any conclusion             that the developed countries are not
                  due to various reasons, but foundered              showing the required enthusiasm in
                  principally because of the traditional             implementing the Doha Development
                  discord on agriculture between the                 Agenda (DDA). On the two main
                  USA and the European Union (EU),                   issues of implementation and textiles
                  and the South’s strong opposition to               and clothing, the USA appears reluc-
                  US demands on labour standards.                    tant to move ahead. Moreover, its
                  Seattle triggered a crisis of credibility          adoption of safeguard action on steel
                                                                     and a new farm bill which increased
                                                                     “WTO-compliant” subsidies suggests a
. . . the WTO has outgrown the processes appropriate to an           US lack of confidence in the Doha
                                                                     results. The recent WTO Trade Policy
earlier time. [. . .]we [need] a [. . . .]greater degree of inter-
                                                                     Review report on the European Union
nal transparency and inclusion to accommodate a larger               confirmed its continuance of high
and more diverse membership.                                         tariff barriers on textiles and agricul-
                                                                     ture. This reinforced doubts about the
                 US Trade Representative Charlene Barshefsky
                                                                     integrity of the EU commitments
                                          cited in CDR 2000
                                                                     and casts a shadow on the efficacy
                                                                     of the DDA.

                  in the multilateral trade system and                  These actions have fuelled the scep-
                  signalled the fundamental need for                 ticism of many developing countries
                  international trade to change from a               as to whether the DDA will be able to
                  narrow “trade creates wealth” perspec-             deliver its objectives.
                  tive to a broader view that sees trade
                  as one element of a sustainable                       This essay looks at the Doha
                  development strategy.2                             Development Agenda and its imple-
                                                                     mentation since it was presented to
                     After the Seattle ‘scare’, the fourth           the public in the fall of 2001. Divided
                  Ministerial Meeting in 2001 at Doha,               into five sections, this paper first pro-
                  Qatar managed to conclude success-                 vides a brief background to the issues,
                  fully. The development friendly lan-               followed by an assessment of the
                  guage of the Doha Declaration set                  major gains and losses for the devel-
                  out three areas of action. One has a               oping countries at the Doha
                  clear mandate on Implementation,                   Ministerial Conference. Third, the
                  Agriculture, Services, Non-agricultural            major issues of concern of the devel-
                  products, Environment, WTO rules                   oping countries vis-à-vis the multilat-
                  (Anti-dumping and Subsidies) and                   eral trading system are highlighted. A
                  TRIPs (dispute settlement). The second             Southern perspective on the Singapore
                  covers the ambiguous Singapore                     issues is presented in the fourth sec-
                  issues. Under the third agenda, a study            tion. The final section concludes with
                  program will set up two new working                relevant policy recommendations.
                  groups on Trade, Debt, and Finance
                  and Trade and Transfer of Technology.

                  12
The Doha Development Agenda: The Road Ahead




The Doha Development                          pulsory licenses. It recognizes each
Agenda: Is There a                            member’s “right to grant compulsory
                                              licenses and freedom to determine the
Payoff for the                                grounds upon which such licenses are
Developing Countries?                         granted.” It adds that each member
                                              “has the right to determine what
The Doha Ministerial Conference               constitutes a national emergency or
marked the first WTO gathering where          other circumstances of extreme
the voices of the developing countries        urgency, it being understood that
received positive recognition. The            public health crises, including those
Doha Ministerial produced three key           related to HIV/AIDS, tuberculosis,
documents: the Declaration on TRIPs           malaria and other epidemics, can
and Public Health; the Decision on            represent a national emergency or
Implementation-related Issues and             other circumstances of extreme
Concerns; and the Ministerial                 urgency.” By giving members the
Declaration. The following discussion         right to decide what constitutes a
outlines their importance to the              “national emergency” or “extreme
developing countries.                         urgency,” the Declaration seemingly
                                              awards them more leeway in issuing
                                              compulsory licenses without prior
Declaration on TRIPs                          effort by the potential licensee to
Agreement and Public Health                   obtain authorization at reasonable
                                              commercial terms. How far this provi-
According to most analysts, the               sion extends remains unclear until its
Declaration on TRIPs Agreement and            boundaries are tested in the WTO
Public Health is a clarification of the       Dispute Settlement Body (DSB).3
TRIPs Agreement, insofar as access to
medicines to control pandemics or                It is important to note the asymme-
epidemics is concerned. Article 31 of         try in the way different members
the TRIPs Agreement allows member             benefit from the increased flexibility
governments to authorize third parties        with respect to compulsory licensing.
to produce a patented product through         Article 31 of the TRIPs Agreement
the “compulsory license” provision            allows the authorization of production
according to local needs. It requires,        by third parties “predominantly for the
however, that this authorization be           supply of the domestic market of the
preceded by efforts by the third party        Member authorizing such use.”
to obtain authorization from the patent       However, members that do not have
holder on reasonable commercial               the domestic capability for such
terms. The requirement can be                 production will effectively be unable
waived “in the case of a national             to benefit from the flexibility. The
emergency or other circumstance of            Declaration has instructed the Council
extreme urgency.”                             for TRIPs “to find an expeditious
                                              solution to this problem and report
   The Doha TRIPs Declaration dilutes         to the General Council before the end
the requirements member govern-               of 2002.”
ments must fulfil before issuing com-



                                                                                   13
                                                 Canadian Development Report—2003




   The Declaration allows the Least      implementation issues have landed on
Developed Countries (LDCs) an extra      the future negotiating agenda of the
ten years to implement the TRIPs         Doha Ministerial Declaration, with the
Agreement for pharmaceutical prod-       developed countries mainly offering
ucts. This moves the implementation      further “best endeavour”, “good-faith
date of patents for medicines from       effort” clauses.
January 1, 2006 to January 1, 2016
for these countries. The outlook for        The Decision is divided into 14 sec-
other patent issues remains uncertain;   tions dealing with issues relating to
there is speculation that seeds and      Uruguay Round Agreements on
agricultural chemicals may also prove    Agriculture (AoA); Sanitary and
controversial when linked to food        Phytosanitary (SPS) Measures; Textiles
security arguments.                      & Clothing; Technical Barriers to Trade
                                         (TBT); Trade-related Investment
                                         Measures (TRIMS); Anti-dumping;
                                         Customs Valuation; Rules of Origin;
Decision on Implementation-
                                         Subsidies and Countervailing
related Issues and Concerns
                                         Measures; and Trade-Related Aspects
This issue gained prominence during      of Intellectual Property Rights (TRIPs).
implementation of the Uruguay Round      Hopefully future discussions will move
Agreement. Developing countries had      beyond the realm of “taking note” or
complained about a number of items       “best endeavour”.
under the various WTO agreements,
which eventually came to be referred        To give two examples, first, under
to as “implementation issues.” At        the so-called “Green Box” provision,
Seattle, developing countries pushed     the AoA exempts certain agricultural
unsuccessfully for an agreement on       support programs in developing coun-
these issues. The matter was raised      tries from inclusion into the calcula-
once again in Doha and culminated        tion of the Aggregate Measures of
in the signing of a separate text, the   Support (AMS), which is the focus of
“Declaration on Implementation-          liberalization commitments. (Green
related Issues and Concerns.”            Box payments include subsidies for
                                         environmental reasons, insurance, and
   Though the title suggests that the    a range of additional measures).4
issues relate to unsatisfactory imple-   These programs, aimed at encouraging
mentation of the Uruguay Round           agricultural and rural development,
Agreement, virtually no item involves    include investment subsidies, agricul-
serious enough violation to warrant a    tural input subsidies, etc., generally
challenge in the Dispute Settlement      available to low-income or resource-
Body. However, on closer examina-        poor producers in developing member
tion, almost all of the issues involve   countries. The Doha Decision on
either the implementation of non-        Implementation-related Issues and
binding, best endeavour clauses in the   Concerns “urges” members to exercise
Uruguay Round Agreement or new           restraint in challenging measures
concessions. Virtually all substantive   applied under the Green Box by




14
The Doha Development Agenda: The Road Ahead




developing countries to promote rural         agricultural products, trade &
development and adequately address            environment, WTO rules, TRIPs, and
food security concerns.                       dispute settlement. Developing coun-
                                              tries stand to benefit from gains in
   Second, the Uruguay Round SPS              agriculture, market access for non-
and TBT Agreements allow WTO                  agricultural products, and WTO rules.
members to introduce legitimate new           However, the language on TRIPs geo-
technical standards and sanitary and          graphical indication5 is vague and the
phytosanitary measures. In some               inclusion of environment is perceived
cases, the agreements provide the             as a setback.
exporting countries short intervals of
time to implement these standards and            Agriculture stands out as a
measures. They do not specify the             contentious area since the Uruguay
precise lengths of intervals, however,        Round. It was the main cause for
and instead refer vaguely to “longer          the failure of the Seattle Ministerial,
time-frame for compliance” or                 and retained its volatility at Doha.
“reasonable interval” to introduce            Ultimately, agriculture proved to be
standards. The Decision defines this          the dealmaker at Doha when the EU
period by stating that it is to be under-     compromised its stance on agriculture
stood to mean normally a period of            subsidies. The Declaration recognizes
not less than six months.                     the progress in negotiations in agricul-
                                              ture mandated by the Uruguay Round
                                              Agreement and commits members to
Ministerial Declaration                       comprehensive negotiations aimed at
                                              substantial improvements in market
Similar to the pre-Seattle parleys, the       access with a view to phasing out all
run-up to Doha also saw development           forms of export subsidies and substan-
concerns reflected in the calls for the       tially reducing trade-distorting domes-
launch of a ‘Development Round’ of            tic support measures.6
negotiations. The Doha Development
Agenda that emerged is recognition of            Many experts are of the opinion
the need to put developing-country            that this was a win for the developing
concerns at the centre of the WTO.            countries. In reality, the EU only made
Although the Doha negotiating agenda          its concession in exchange for stronger
and work program illustrates the              language on the environment, invest-
importance of developing countries in         ment, and competition policy. The
the trading system, achieving a pro-          triangle of agriculture, environment,
development outcome remains a                 and the “Singapore Issues”, especially
major challenge.                              investment and competition policy,
                                              became the most important nexus for
   The Ministerial Declaration offers a       trade negotiation and bargaining in
clear negotiating mandate for seven           the final hours at Doha.7
areas under the Doha Work Program:
implementation issues, agriculture,              The Declaration invokes strong
services, market access for non-              language for Special and Differential




                                                                                      15
                                                    Canadian Development Report—2003




Treatment (S&DT) for developing               The Uruguay Round Agreements
countries: “we agree that special and      resulted in a major step forward,
differential treatment for developing      bringing the agriculture and services
countries shall be an integral part of     sectors under the disciplines of the
all elements of the negotiations and       GATT. In order to realize the potential
shall be embodied in the Schedules         gains from trade, developing countries
of concessions and commitments             made substantial progress in liberal-
and as appropriate in the rules and        izing their own trade policies. Tariffs
disciplines to be negotiated, so as to     were cut, and fewer products were
be operationally effective and to          covered by quantitative restrictions.
enable developing countries to effec-      Despite the developing countries’
tively take account of their develop-      efforts to liberalize trade, their success
ment needs, including food security        in integrating into the world economy
and rural development.” This is seen       is far from universal. The LDCs experi-
as an improvement over the language        enced further marginalization. Their
contained in Article 15.1 of the AoA       share in world exports of goods and
promising good-faith efforts.              services fell by half between 1980 and
                                           1999 to 0.42 per cent. Their share of
   The Declaration also takes note of      world imports declined by 40 per cent
the non-trade concerns “reflected in       over the same period and stood at
the negotiating proposals submitted by     0.7 per cent in 1999.9
Members” and confirms they are to be
taken into account in the negotiations        In the farm sector, substantial
as provided for in the AoA. The            protection barriers continue to exist,
reference to non-trade concerns is         whereas in non-agricultural products,
viewed as opening the gates to the         developing countries continue to face
debate on the whole range of these         tariff peaks and escalation for some
issues, including the multifunctionality   categories of manufacturing products,
argument of the EU.8                       such as textiles and clothing, footwear,
                                           etc. The overall scenario in world
                                           trade reflects continued protectionism
                                           by the developed countries and the
The Multilateral Trading                   absence of complementary measures
System: Key Issues for                     important to the creation of an
                                           enabling environment for supply-side
Developing Countries                       responses to changed incentives.10
Following the establishment of the
                                              This section provides an overview
WTO in 1995, it became clear that
                                           of the key market access issues, and
many developing country govern-
                                           the supply-side and institutional con-
ments, enterprises, and non-govern-
                                           straints that confront developing coun-
mental organizations (NGOs) were
                                           tries. Better market access must be
disappointed with the outcome of
                                           complemented by supply-side initia-
the Uruguay Round, both in terms
                                           tives to address national trade capacity
of market access payoffs and the
                                           constraints and improve the invest-
burden of implementing certain
                                           ment climate in developing countries.
WTO agreements.


16
The Doha Development Agenda: The Road Ahead




Major roadblocks to                              The tariff structure in many indus-
market access                                 trial countries still contains rates over
                                              100 per cent. Low average duties
Market access negotiations in the
                                              conceal high tariffs and tariff escala-
WTO focus on tariff reductions and
                                              tion. These tariff peaks are often
the elimination or reduction of certain
                                              concentrated in products that are of
non-tariff barriers to imports. WTO
                                              export interest to developing coun-
rules like SPS, TBT, Anti-dumping,
                                              tries, including major agricultural
Subsidies and Countervailing
                                              products such as sugar, cereals, and
Measures, etc., covering contingency
                                              fish; tobacco and certain alcoholic
protection, are not part of market
                                              beverages; fruits and vegetables;
access negotiations per se, although
                                              clothing; and footwear.11 Developing
they can have an important effect on
                                              countries must also deal with other
market access conditions.
                                              forms of tariff barriers, such as variable
                                              tariffs and tariff rate quotas. Imports at
   It would be unfair to maintain that
                                              tariff peaks represent about five per
the Uruguay Round did not make any
                                              cent of total Quad (Canada, European
contribution toward lowering global
                                              Union, Japan, and USA) imports from
trade barriers. However, the poor
                                              developing countries, and more than
countries have still not been able to
                                              11 per cent of total Quad imports
penetrate the developed countries’
                                              from LDCs.12
markets. The majority of tariff bindings
are much higher than the applied
                                                  Tariff escalation has been a matter
tariffs, creating uncertainty for
                                              of concern for developing countries as
exporters wishing to access these
                                              it increases the rate of effective protec-
markets. While the overall use of non-
tariff measures has declined, the use
of certain trade remedy instruments,
such as anti-dumping and countervail-         The full potential of trade to reduce poverty cannot be
ing measures, is on the rise. Moreover,       realized unless poor countries have access to markets in
there is mounting evidence of the dif-        rich countries.
ficulties faced by developing coun-
                                                       Oxfam’s Rigged Rules and Double Standards, page 10
tries, especially LDCs, in implement-
ing WTO commitments in new areas
such as TRIPs, SPS, and TBT.
                                              tion at higher stages of production,
                                              thereby making market access more
   For poor countries, the major
                                              difficult for finished manufactured
concerns are tariff peaks, tariff escala-
                                              products. For example, in the case of
tion, distortion in agriculture trade,
                                              food products, the 1997 EU tariff rate
restrictions on textiles and clothing,
                                              was 15.7 per cent, 17.6 per cent and
and the growing incidence of anti-
                                              24 per cent, respectively, at the
dumping measures, etc. These are the
                                              primary, semi-processed, and fully
main obstacles to free and fair market
                                              processed stage. In the case of
access in developed countries. These
                                              Canada, the degree of escalation was
hurdles impede their capacity to
                                              much higher at 1.8 per cent, 7.2 per
integrate into the WTO or move their
                                              cent and 42.1 per cent for the three
people along the path of trade
                                              levels of processing, respectively, in
liberalization.

                                                                                       17
                                                                               Canadian Development Report—2003




                                                                      1998. Tariff escalation in high-income
Box 1                                                                 countries has the potential of reducing
                                                                      demand for processed imports from
Agreement on Agriculture: Some
                                                                      developing countries, hampering
Serious Concerns
                                                                      diversification into higher value-added
• The practice of “dirty tariffication” (tariffs set above            exports. This phenomenon also exists
  the equivalent of existing non-tariff barriers) resulted            in large developing countries like
  in bound tariffs at abnormally high rates. Since inter-             Malaysia and India, on which the
  national agricultural prices in the base period for the             LDCs depend for market opportuni-
  Uruguay Round AoA (1986-88) were far below the                      ties. These tariff barriers pose industri-
  high domestic prices supported by quotas, the con-
                                                                      alization problems for primary-
  version of quotas into tariff equivalents resulted in
  high rates of tariff protection.
                                                                      product exporting countries as well.
                                                                      They cannot sustain, expand, or create
• Support to agricultural producers in high-income                    new industrial capacities to increase
  countries remains sizeable. The OECD estimated it                   employment or raise living standards.
  at US$245bn in 2000, about five times the level of
  international development assistance.a Total support
  to agriculture, according to the OECD, is even higher,
  at about US$327bn in 2000, which is about 1.3 per                   Distortions in agricultural
  cent of the total GDP of OECD countries.                            trade
• Export subsidies in agriculture allow countries to                  As a result of the Uruguay Round,
  export surpluses to the world market at prices below                agriculture was brought under WTO
  the high domestic prices. Export subsidies averaged                 disciplines. Import measures had to
  about US$7bn in 1995-98, of which 95 per cent was                   be eliminated or converted to tariffs
  granted by the European Union.                                      (“tariffied”), and then subjected to
• Adding insult to injury, after the Doha meeting, the                progressive reduction commitments,
  USA announced a US$55bn agricultural subsidy meas-                  except for rice and some other staple
  ure, which although WTO-compliant, runs against the                 foods that were subject to minimum
  spirit of liberalization.                                           access commitments—that is, Tariff
                                                                      Rate Quotas (TRQs). There was also
• The average fill rates of TRQs have been low and                    agreement on the reduction of the
  declining, from 67 per cent in 1995 to 63 per cent in
                                                                      level of domestic support, except for
  1998, while about a quarter of tariff quotas were
  filled to less than 20 per cent.b
                                                                      exempted Green Box policies and de
                                                                      minimus amounts (amounts below a
• Non-trade concerns like food security and rural                     certain level).
  development of poor countries are very important as
  between 40 and 60 per cent of the poorest in the                       Developing countries were allowed
  developing world live in rural areas.c                              more flexibility through longer
                                                                      implementation periods and lower
Notes:                                                                reduction commitments by S&DT
a: OECD, The Uruguay Round Agreement on Agriculture: An               provisions. However, the share of
   Evaluation of its Implementation in OECD Countries, Paris, 2001.   developing country exports in global
b: OECD, Post-Uruguay Round Tariff Regimes:Achievements and           agricultural trade has increased only
   Outlook, Paris,1999.
                                                                      slightly over the period from 1990
c: World Bank, World Development Report 2000.
                                                                      through 1999, from 40.5 per cent
                                                                      to 43 per cent.13 The support to



                  18
The Doha Development Agenda: The Road Ahead




agriculture is still sizeable and grow-       valuation, and SPS) could cost more
ing in high-income (OECD) countries           than a year’s development budget for
(see Box 1).                                  the poorest countries.15



Rules on standards and                        Poor operationalization of
technical barriers                            S&DT provisions
While traditional trade barriers in              The Uruguay Round had an explicit
agriculture such as tariffs continue to       understanding that developing coun-
decline, the use of technical and             tries were to be accorded Special &
regulatory barriers is on the rise. In        Differential Treatment (S&DT) in the
recent years, Sanitary and                    negotiations in line with the terms of
Phytosanitary (SPS) measures and              the 1979 Framework Agreement.
Technical Barriers to Trade (TBT)             Various elements of S&DT grant
have emerged as the greatest threat           developing countries and LDCs more
to poor countries’ exports.                   favourable access to markets in the
                                              industrial countries and allow them
   By their very nature, both of these        substantial policy discretion with
agreements may result in restrictions         respect to their domestic markets.
on trade. All governments accept the
fact that some trade restrictions may            In principle, the existence of S&DT
be necessary and appropriate in order         provisions takes into consideration the
to ensure food safety and animal and          different stages of development of a
plant health protection; however,             country and the way these disparities
developed countries are increasing            significantly affect the benefits, which
their arbitrary use of these measures.

   Developed countries are adopting           I don’t know how American farmers can sell corn to this
stricter standards for macro-cleanli-
                                              country at such low prices. I have heard that their govern-
ness, microbial loads, aflatoxin, and
pesticide residues. For instance,             ment gives them money. What I know is that we cannot
Japan insists on DDT residues level of        compete with their prices. Imports are killing our markets
0.4 PPM on unmanufactured tobacco
                                              and our communities.
while the international standard is as
high as 6 PPM.14                                      Hector Chavez, smallholder farmer, Chiapas, Mexico,
                                                                             quoted in Oxfam, 2002, p.21.
   Developing countries are especially
vulnerable to regulatory changes in
developed countries as they lack the          these countries derive from multi-
public resources to finance compli-           lateral trading system. At present,
ance with new and more restrictive            there are over 145 S&DT provisions
SPS and TBT standards. A World Bank           that apply differential rules to the
study estimated that implementing             developing countries during imple-
just three of the Uruguay Round               mentation of the various WTO agree-
Agreements (on TRIPs, customs



                                                                                       19
                                                                            Canadian Development Report—2003




                                                                   Round, there has been little movement
Box 2                                                              since the last Ministerial as the S&DT
                                                                   review has now been extended to the
Upgrading Standards: A Fact Sheet
                                                                   end of 2002 (see Box 3). Many devel-
Product standards are a critical part of trade in the              oping countries have voiced their
twenty-first century. These include product and sanitary           concerns, claiming a lack of meaning-
and phytosanitary standards necessary for market access            ful progress on S&DT will most proba-
in agriculture. The development challenge posed by                 bly result in a slowdown of all other
standards and border barriers are particularly important
                                                                   negotiating tracks.
to the future trade prospects of the LDCs. Following are
some bitter facts about standards:

The OECD estimates that standards alone represent an               Participation and
additional cost of between two and ten per cent of final           transparency in rule-making
product costs.
                                                                   The Doha Round saw a change in
• Most developing countries do not have the resources              developing-country involvement, with
  to apply standards. In Guatemala, for example, the               the prospect of their becoming active
  total budget for standards in 2000 totalled                      participants in the negotiating process.
  US$119,000. This represents a small fraction of the              Yet, many developing countries still
  total government budget.                                         have inadequate (or no) representation
                                                                   in Geneva, which impedes their active
• The World Bank’s experience with standards in the
                                                                   engagement in negotiations and in the
  1990s shows that investments of US$305m (Vietnam),
  US$155m (Turkey), and US$5m in Morocco, were
                                                                   day-to-day functioning of the WTO
  needed in order to begin the process of moderniza-               (see Box 4). Although options have
  tion.                                                            been identified to expand representa-
                                                                   tion in Geneva at relatively low cost,
• In Jamaica, implementation of the SPS agreement will             expertise is still in short supply.
  require a total of US$7.6m. This includes a revision of          Funding could be made available to
  current laws and regulations to make them WTO-                   allow low-income countries to finance
  compliant (US$200,000); establishment of an                      the cost of hiring experts to undertake
  Agriculture, Health and Food Safety Authority to                 the required analyses.
  administer and coordinate SPS activities (US$6m),
  and other activities.                                               A second important aspect of the
                                                                   Round is transparency in the decision-
Source: World Bank, Global Economic Prospects and the Developing   making process. It also includes
Countries 2002, 2001.
                                                                   enhancing transparency in WTO
                                                                   operations and improving access to
                                                                   and dissemination of WTO databases,
                 ments. Unfortunately, most of these               reports, and information. This would
                 are of the “best endeavour” variety               broaden the basis for participation of
                 and none are binding.                             developing countries. Developing
                                                                   country grievances with the existing
                   The Doha Ministerial Declaration                system mounted following the conclu-
                 contains several mentions of S&DT                 sion of the Uruguay Round, particu-
                 but most of them are superficial. In the          larly regarding the constraints the
                 ongoing negotiations under the Doha               agreements imposed. Although



                 20
The Doha Development Agenda: The Road Ahead




developing countries played an
active role in the period leading up            Box 3
to the Seattle meeting, submitting over
                                                S&DT Review
half of the more than 250 specific
proposals on the agenda, they claimed           As per the timeline of the next Ministerial Conference
that their proposals were not given             in Cancun, the Committee on Trade and Development
due consideration.                              (CTD) was to report to the General Council (GC) with
                                                clear recommendations for a decision on S&DT issues by
   The “green-room”16 practice fuelled          July 31, 2002. At the July GC meeting, the deadline was
                                                extended until December 31, 2002. Developing countries
their disenchantment, underscoring
                                                expressed their disappointment in missing the Doha-
the claims of a “democratic deficit”            mandated July target date. The EU had initially pushed
and a lack of transparency during               for a March 31, 2003 deadline, thus aligning the issue
the Seattle meeting. At Doha this               with the agriculture and services negotiations. With a
system was replaced by the                      December deadline, the next challenge lies in finding a
Committee of the Whole                          way of organizing the future work program so as to
(CoW)/Friends of the Chair process              avoid a similar deadlock. With almost 90 proposals on
for the purposes of consultations.              the table, and only four formal meetings scheduled
                                                between September and December, members will be
                                                hard-pressed to determine which issues must
                                                be prioritized.
Supply-side and
institutional constraints
The problems vis-à-vis realization of
market access opportunities for devel-           Key problem areas in many low-
oping countries are also linked to their      income countries are product stan-
own supply-side and institutional con-        dards and services. Many low-income
straints, that is “behind the border”         countries are not adequately equipped
barriers to trade. If a country’s             to deal with rapidly tightening product
investment climate is poor and its            standards and labelling requirements
institutions and infrastructure are           and confront major investment
weak, simply changing relative price          requirements in order to do so.17
incentives through trade policy may
                                                 The availability of low-cost, high-
do little to promote sustained growth.
                                              quality financial, telecommunication,
A supporting legal and regulatory
                                              and transportation services are critical
environment is vital if trade liberaliza-
                                              determinants of the competitiveness of
tion is to serve as an engine of growth.
                                              national firms. Research has shown
Elements that affect the investment
                                              that measures aimed at reducing the
climate include policies and institu-
                                              cost of services that facilitate trade
tions that support the participation of
                                              have economy-wide welfare benefits
national firms in international markets
                                              that are a multiple of those associated
and measures to enhance their
                                              with merchandise liberalization.18
competitiveness by ensuring access to
                                              Whatever the priorities, there is a
crucial services inputs—both public
                                              need for complementary macroeco-
and private.
                                              nomic, education, health, and tech-
                                              nology policies. Separating out the



                                                                                       21
                                                                               Canadian Development Report—2003




                                                                      The Singapore Issues: A
Box 4
                                                                      Southern Perspective
Participation in the WTO
                                                                      Generally, developing countries have
• In 1997, the industrial countries deployed an average
                                                                      been against the inclusion of new
  of 6.8 officials to follow WTO activities in Geneva.
  Developing countries sent an average of 3.5.                        issues at the WTO. The Singapore
                                                                      issues are no exception. However,
• Twenty-three least-developed country members of                     there is a fundamental difference
  the WTO have no representation in Geneva.                           between the Singapore issues and
                                                                      other non-trade issues (such as envi-
• A recent survey of African delegations in Geneva                    ronment and labour) under discussion.
  shows that virtually all of them are staffed by offi-               While other issues are potentially
  cials from the Ministry of Foreign Affairs rather than              trade-restrictive, the Singapore issues,
  the Ministry of Trade.                                              by and large, can facilitate trade liber-
                                                                      alization, which is the overall objec-
• Located in Geneva, the WTO is far from most devel-
                                                                      tive of the WTO. Yet, many developing
  oping-country capitals; immediate, day-to-day
                                                                      countries feel that these issues are
  domestic concerns in these capitals seem to leave
  little time for planning on long-term WTO issues;                   better kept outside the WTO, at least
  this seems to be the case even for large developing                 for the time being.
  countries.
                                                                         Many are still sceptical about the
                                                                      benefits and rationale of including
Source: A. Oyejide, Interests and Options of Developing and Least-
Developed Countries in a New Round of Multilateral Trade              investment, competition policy, trade
Negotiations. G-24 Discussion Paper Series, No. 2 (New York: United   facilitation, and transparency in gov-
Nations, 2000).                                                       ernment procurement. Although the
                                                                      experience of realpolitik at the WTO
                                                                      indicates that negotiations on these
                                                                      issues are most likely to be launched,
                  trade agenda from the more broadly                  WTO agreements on these issues,
                  defined development agenda is diffi-                especially investment and competi-
                  cult, if not impossible.19                          tion, are being proposed by a number
                                                                      of countries including the EU, Korea,
                     The WTO has a role to play in
                                                                      and Japan. They are being vigorously
                  dealing with such constraints. The
                                                                      opposed by India, Malaysia, Egypt,
                  WTO’s responsibility evolves from the
                                                                      and others, while the USA has said it
                  six-agency Integrated Framework for
                                                                      will not stand in the way of such
                  LDCs, which is committed to integrate
                                                                      agreements, it will not be an active
                  LDCs into the international trading
                                                                      proponent.
                  system. Some of the proposals will
                  require additional flexibilities, which                In a recent development, however,
                  can be negotiated through S&DTs,                    the USA has fired a salvo, which
                  when implementation poses problems.                 could derail any desirable progress on
                  This issue is also likely to be deliberat-          these discussions. In a statement
                  ed at the new working groups on                     before the Working Group, the USA
                  trade, debt and finance, and trade and              has said that in view of its positive
                  transfer of technology.



                  22
The Doha Development Agenda: The Road Ahead




experience with bilateral investment          accepts that there are merits, however,
treaties, portfolio investment and pre-       it may place a substantial financial
establishment rights should feature in        burden on developing countries.
any investment agreement at the               Regarding the other Singapore issue,
WTO, otherwise they will not be inter-        although no one is against ensuring
ested. Both these definitional issues         transparency in government procure-
are anathema to many developing               ment as such, it is widely believed
countries, and thus will not fly. China       that it may be a Trojan Horse for a
and others have already retorted that         market access agenda.
these demands cannot be met.

  The LDC’s position was summed
                                              Trade and investment
up in a statement by Tanzanian
Ambassador Ali Mchumo at the                  Attempts to multilateralize the issue of
General Council Meeting in October            investment began with its inclusion in
2001:                                         the Havana Charter, as part of the
                                              unsuccessful effort to set up an inter-
  “LDCs were not ready to negoti-             national trade organization just after
  ate on [Singapore issues] since the         World War II. The United Nations later
                                              tried to establish standards of behav-
  issues were complex and the
                                              iour for transnational corporations
  LDCs were not able to fully under-          (TNCs), particularly via the Code of
  stand the development implica-              Conduct proposed by developing
  tions for them. It is for this reason       countries (the Group of 77); this effort
  that with regard to investment and          was aborted in 1992 under pressure
  competition policy, we preferred            from the USA. Within the General
  the options for the continuation of         Agreement on Tariffs and Trade
                                              (GATT), the issue was dealt with
  the study process and we took the
                                              occasionally until the Uruguay Round,
  same view for government pro-               with theoretical discussions on the
  curement and trade facilitation.            possibility of developing a ‘GATT
  We are therefore surprised and              on investments’ having taken place
  disappointed that in your current           as early as the 1970s. Toward the
  text there is only one option for           end of the decade, discussions were
                                              held under the auspices of the
  negotiations on all the four areas.”
                                              Development Committee of the World
                                              Bank and the International Monetary
   On competition policy, the main            Fund. Even though these did not lead
objection of developing countries is          to any specific or concrete instrument,
that they do not have adequate experi-        non-binding guidelines for the treat-
ence regarding investment policy, they        ment of foreign direct investment (FDI)
feel that countries are trying their best     were adopted in 1992.
to provide an investor-friendly envi-
ronment unilaterally and hence there             The 1994 Uruguay Round
is no need for a multilateral agree-          Agreements also addressed topics
ment. On trade facilitation, everybody        directly or indirectly related to



                                                                                    23
                                                   Canadian Development Report—2003




investment. During the Uruguay            as defined by GATS. With respect to
Round trade negotiations, the             SCM, certain investment incentives lie
developed countries advanced the          within the definition of a subsidy and
idea of framing multilateral rules        as such are prohibited.
to further liberalize the foreign
investment regime.                           Besides this, the TRIMs agreement
                                          has a built-in agenda under Article 9
   The developing countries opposed       of the agreement, under which WTO
any such idea, primarily on the           members may recommend expansion
grounds that they were unwilling to       of the WTO agreement to broader
embark on multilateral negotiations       investment and competition policy. At
on investment under the GATT, which       the Singapore Ministerial, members
was essentially devoted to trade          decided to set up two study groups to
relations. Many least developed and       examine the necessity of further
developing countries had, in any case,    accords on investment and competi-
liberalized their FDI regimes substan-    tion policy.
tially and considered that they were
served well under the many bilateral         The Doha Ministerial made substan-
arrangements signed with several          tial progress in pushing the competi-
developed countries. Nonetheless,         tion and investment agenda further.
they agreed to negotiate on four          The Doha Declaration recognized the
clusters of investment-related matters    utility of having multilateral agree-
involving Trade-Related Investment        ments on investment and competition
Measures (TRIMs), the General             with a work program to clarify the
Agreement on Trade in Services            elements of a possible multilateral
(GATS), Trade-Related Aspects of          framework. The Declaration also
Intellectual Property Rights (TRIPs),     expressed the willingness of the
and the Agreement on Subsidies and        members to launch negotiations after
Countervailing Measures (SCM).            the Fifth Ministerial, subject to an
                                          explicit consensus on the modalities
   TRIMs deals with investment issues     of negotiations. Scholars have argued
such as local content requirements        that this is tantamount to the launch
and export balancing. TRIPs also          of negotiations per se and that it is
affects FDI in that the definition of     only the methodology which needs to
intellectual property rights and adher-   be negotiated.
ence to the international standards
and procedures constitute part of the        Many developing countries remain
framework within which foreign            unconvinced, as there is no evidence
investment takes place. The GATS          to suggest that an international invest-
relates to FDI matters since many         ment agreement would in effect
services can only be provided by the      increase investment flows to develop-
establishment of a local company,         ing countries. Furthermore, contrary to
either as a subsidiary or a joint         expectations, investment flows to
venture, by a foreign service provider.   developing countries have actually
In fact, commercial presence is one of    declined as a proportion of total FDI
the “four modes” of exporting services    since the establishment of the WTO.



24
The Doha Development Agenda: The Road Ahead




Developing countries are comfortable          Competition policy
with the existing investment-related
                                              Strictly speaking, a multilateral
provisions in the WTO acquis. TRIMs
                                              approach to competition policy is not
has tied their hands considerably and
                                              a new issue. An entire chapter was
has not resulted in any substantial
                                              devoted to restrictive business prac-
increase in the inflow of FDI. As such,
                                              tices (RBPs) in the aborted Havana
TRIMs is widely considered a victory
                                              Charter, but was dropped in the GATT.
for the transnational corporations.
More importantly, the agreement                  Competition policy issues and
concentrates more on TRIMs heavily            measures to deal with restrictive
used by the developing countries.             business practices were raised in
There is also a concern that WTO              the Uruguay Round negotiations.
rules might effectively give foreign          Although there is no multilateral
investors preferential treatment relative     agreement on trade and competition
to national investors if modelled after       policy, the underlying issues are very
NAFTA investment provisions.                  much present in many of the provi-
                                              sions of the existing WTO Agreements,
   On the other hand, the Doha
                                              namely GATS, TRIPs, and TRIMs. The
agenda agrees to examine a possible
                                              Agreement on Safeguards, Article XVII
agreement on a GATS-type approach
                                              of GATT 1994 and other provisions
where members may agree to open
                                              also deal with certain competition
such sectors as they wish to, rather
                                              issues.
than open every sector a priori. Still,
they fear the proposed agreement on              An interesting development has
investment would limit the scope for          emerged from discussions at the WTO.
domestic control of transnational             Many countries which did not have a
corporations without any balancing            competition law, have either enacted
measures. It will be more pronounced,         one or strengthened the existing one,
particularly, in the context of those         or are in the process of enacting one.
LDCs whose economic might is                  When the WTO came into being, only
considerably weaker than many of              50 countries had a competition law;
the corporations and also hamper              today nearly 100 countries have one.
investment decisions by the govern-           Many have begun to realize that liber-
ments in the context of national              alizing without an effective competi-
development strategies. Further, if           tion law has been causing problems
these rules are modelled on the lines         for their economies. As a result of
of NAFTA, they might discriminate             greater global concentration of owner-
against domestic investors by not             ship, consumers and weaker produc-
providing them the same rights as             ers worldwide and developing coun-
foreign investors. Whereas a foreign          tries have become more vulnerable to
firm can sue a government at an inter-        anti-competitive abuses by corpora-
national forum, a domestic investor           tions. This calls for a stronger competi-
cannot sue its own government,                tion policy, not only at the national
except in domestic fora.                      level but also at regional and interna-
                                              tional multilateral levels.



                                                                                     25
                                                                         Canadian Development Report—2003




                    It is impossible for a single country        top 200 corporations account for more
                 to control the abusive practices perpe-         than a quarter of the global economic
                 trated by global monopolies unless it           activity. These corporations are capa-
                 has a large market like the United              ble of creating serious barriers to
                 States or the European Union. This is a         trade. Thus, the need for a multilateral
                 serious problem for the developing              competition regime can hardly be
                 countries, and more specifically the            overemphasized, but whether this
                 LDCs, due to their weak enforcement             should be negotiated at the WTO or
                 capabilities.                                   somewhere else is a different matter.

                                                                     During the Uruguay Round negotia-
Trade barriers in rich countries inflict real costs on poor      tions, the demand for multilateral rules
                                                                 on restrictive business practices came
people in poor countries. Some of the world’s most
                                                                 first from the developing countries.
vulnerable communities are being denied an opportunity           However, it is ironical to see that the
to reap the potential benefits of integration into global        developing countries, which once
                                                                 promoted the idea of converting the
markets. Poor people in general and women in particular
                                                                 UNCTAD Set (The Set of Multilaterally
bear the brunt, since it is they who produce the goods           Agreed Equitable Principles and Rules
most affected by import barriers: agricultural and labour-       for the Control of Restrictive Business
intensive manufactured products. Agriculture accounts
                                                                 Practices, 1980) into a binding
                                                                 instrument, are now less enthusiastic
for 62 per cent of women’s employment in developing              with the idea of a multilateral compe-
countries, and women make up 70 per cent of workers in           tition framework within the WTO. This
export-processing zones.                                         is in spite of the fact that they are
                                                                 likely to benefit most if such a frame-
                                              Chen et al. 1999   work is developed and enforced in a
                                                                 fair manner. Their scepticism, howev-
                                                                 er, is not without reason.
                    They are frequent targets of anti-
                 competitive and unfair practices                   One of the main reasons for their
                 perpetrated by corporations operating           scepticism is their unsatisfactory
                 from other countries. Small markets             experience with the Uruguay Round
                 restrict the basket of protective               Agreements and the present function-
                 measures that these countries can               ing of the multilateral trading system
                 employ. Few companies are interested            under the WTO. Expectations from the
                 in these markets, leading to low                URAs were very high, but did not
                 market contestability; the existing             materialize. All the trade-offs did not
                 players do not find much threat from            pay off. Therefore, any new agenda
                 the potential new entrants. There is no         pushed forward by developed coun-
                 multilateral framework for binding              tries is seen by the developing country
                 obligations on restrictive practices by         members as yet another attempt to
                 private corporations. This is ironic, as        win further concessions from them,
                 more than half of the world’s largest           without any reciprocating moves.
                 100 entities are now corporations. The




                 26
The Doha Development Agenda: The Road Ahead




   The approach of both the EU and
Japan on the issue of competition                Box 5
policy at the WTO is seen by the
                                                 Global business and competition
developing world as a ‘market access’
push, seeking only to remove policies            In 1980, 180 companies dominated the world food and
favouring national companies rather              beverage industry with highly segmented markets.
than focusing on measures addressing             Today, at least half of these companies retain roughly
market dominance. Developing                     the same market power. In the early 1980s, the top 20
                                                 pharmaceutical companies held about five per cent of
countries also fear that under a com-
                                                 the world prescription drug market. Today, the top ten
petition regime, large transnational             companies control 40 per cent of the market. Sixty-five
corporations will swallow up local               agrochemical companies were competitors in the world
companies, and thus dominate their               market at the beginning of the 1980s. Today, nine com-
economies. The EU has stated that it             panies account for approximately 90 per cent of global
is not interested in such a deal, but is         pesticide sales. Ensuring competition and consumer wel-
seeking a regime which will enable               fare in a liberalized trade regime is a major challenge.
better market behaviour by its own
corporations. Before Doha, the EU                Recently, there has been a sharp increase in global cartel
also proposed that a plurilateral agree-         activity. Consumers, either directly or indirectly, bear
ment can be pursued even if all coun-            the cost in higher prices and reduced choice.
tries participate in negotiations and do         Simultaneously, enforcement agencies have slapped
                                                 multi-million dollar fines against vitamin companies,
not sign on the dotted line at the end.
                                                 food additive makers, steel manufacturers, etc.
Further, the recent soft line taken
by the US vis-à-vis a multilateral               A World Bank study has shown that in 1997, developing
agreement on competition is viewed               countries imported US$81.1 bn of goods from industries
by many as an effort to enable                   where price-fixing conspiracies were rampant during the
smooth cross-border mergers, in                  1990s. These imports represented 6.7 per cent of
which US-based corporations have                 imports and 1.2 per cent of Gross Domestic Product
a significant stake.                             (GDP) in developing countries. Several other price-fixing
                                                 conspiracies may remain undetected. Moreover, all of
   While clearly suspicious of these             these cartels are made up of producers that are mostly
pronouncements, many of the devel-               from industrialized OECD countries.20 To date only a
oping countries are of the opinion               handful of countries have taken action to penalize trans-
that, even if such an arrangement is             gressing companies or to recover compensation. No
                                                 developing country, except Brazil, has taken any action
arrived at, it may not be sufficient to
                                                 on these cartels. Owing to their domestic scope, nation-
solve every problem. For instance,               al competition laws are severely limited when it comes
export cartels are deliberately kept out         to dealing with cross-border competition cases.
of the purview of their own competi-
tion law in many countries (for exam-
ple, export cartels are exempted in
the USA through the Webb-Pomerene             Trade facilitation
Act). If this approach is outlined at
the WTO, the developing countries             There is general agreement on the
(who, in general, import more than            merits of trade facilitation. It is defined
they export) will be the losers in the        as “the simplification and harmoniza-
long run.                                     tion of international trade procedures”
                                              with trade procedures being the



                                                                                         27
                                                    Canadian Development Report—2003




“activities, practices and formalities     this area, but this has not reassured
involved in collecting, presenting,        the developing countries. They con-
communicating, and processing data         clude, from past experiences that
required for the movement of goods in      assistance may not be forthcoming,
international trade”.21 This definition    while the agreement will make things
relates to a wide range of activities      difficult for them.
such as import and export procedures
(e.g., customs or licensing proce-            A cut-off clause in relation to dis-
dures), transport formalities, payments,   pute settlement on trade facilitation
insurance, and other financial             matters has been proposed. Cases
requirements. These are cumbersome         relating to consignments below a
and place enormous burdens on              cut-off point would not be brought to
traders, increasing transaction costs      the dispute settlement panel,22 but no
unnecessarily.                             one knows what this point would be.
                                           Thus, there is a chance that the WTO
   In many cases, the losses that busi-    dispute settlement machinery would
ness suffers through border delays,        be flooded with trade facilitation
complicated and unnecessary docu-          cases. Alternatively, if the cut-off point
mentation requirements, and lack of        is set too high, the agreement will
automation of government-mandated          benefit only developed-country traders
trade procedures are estimated to          and work against the developing
exceed the costs of tariffs. WTO           countries. Further, it will provide a
estimates put the costs of trade trans-    better facility to developed-country
actions equal to seven to ten per cent     traders, as traders from the developing
of the total value of world trade.         countries will not be able to take the
Another estimate puts the total cost       dispute settlement route against their
worldwide at around US$75bn.               own governments.
Developing-country traders are
probably more constrained than their
developed country counterparts             Government procurement
because of these unnecessary
hindrances. Since developing-country       No one is against ensuring transparency
traders are relatively smaller in size     in government procurement as such,
and trade in smaller lots, their costs     but many developing countries believe
for documentation, etc., are dispropor-    that the issue is better left for national
tionately higher. Costs are often fixed    governments to take appropriate
and do not vary according to the size      action. It is widely assumed that the
of the consignment.                        goal of a multilateral procurement
                                           agreement is to improve market access
   Moreover, there is a sense that a       for foreign firms. The same group of
multilateral agreement on trade facili-    countries that were unwilling to
tation will place substantial financial    concede any ground to the developing
burdens on developing countries. The       countries on TRIPs and public health
Doha Declaration has promised to           issues are now pushing forward the
ensure adequate technical assistance       procurement agenda. Arguments that
and support for capacity-building in       this will help the developing countries



28
The Doha Development Agenda: The Road Ahead




by promoting good governance, has             trade implications. In this case, it is
raised suspicion about the underlying         not clear why such an agreement
motives. The fact that the Doha               should be negotiated at the WTO.
Declaration emphasized the negotia-           The WTO exists to liberalize trade,
tions shall be limited to transparency        not to promote good governance in
aspects, and therefore not restrict the       developing countries, for which
scope for countries to give preferences       there are other intergovernmental
to domestic goods and suppliers, did          organizations.
not dispel suspicions.

    Their doubts are not without reason.
The existing WTO plurilateral                 Non-Trade Issues:
agreement on government procure-              Overloading the Agenda
ment (GPA) that came into force on
January 1, 1996, goes far beyond              Out of several non-trade issues, labour
transparency. Governments are                 and environment have always been a
required to apply national treatment          major bone of contention between the
to goods, services, and suppliers, of         developed and developing countries.
other parties to the GPA and to abide         The status of labour and environment
by the most-favoured-nation rule,             is different in the WTO. There is a
which prohibits discrimination among          committee on trade and environment,
them. In terms of services, the GPA           which has a mandate to hold discus-
takes a GATS-type positive list               sions on a 10-point agenda. On
approach and only those services              labour it was decided during the
listed in the annexes are covered by          Singapore Ministerial that the ILO is
the agreement.23                              the competent body to set and deal
                                              with core labour standards, but that
   If its proponents are to be believed,      there should be a dialogue between
the proposed multilateral agreement           the ILO and the WTO.
must be fundamentally different from
the existing plurilateral agreement, as          After the Doha Ministerial Confer-
non-discrimination (national treatment        ence, the situation altered. The Doha
and MFN) lies at its core. It is not          Declaration brought environment into
clear if a multilateral agreement is          the negotiating agenda for the first
signed what will happen to the exist-         time in spite of opposition by the
ing GPA. Obviously, developing coun-          developing countries. The EU was
tries suspect that the ultimate aim of        the main demandeur, appealing for a
the multilateral agreement is to estab-       face-saving agreement to counter-
lish a framework similar to the existing      balance the language on phasing out
plurilateral GPA.                             agricultural subsidies, and got a com-
                                              mitment to start limited negotiations.
   Moreover, as many countries have           Fortunately, the negotiating mandate
argued, if transparency in government         in the Declaration is quite limited and
procurement has nothing to do with            unlikely to damage the interests of
market access, as claimed by its              developing countries significantly. In
supporters, then neither has it any           our opinion it may actually help


                                                                                        29
                                                    Canadian Development Report—2003




developing countries by clarifying the      provides the appropriate forum for a
relationship between multilateral           substantive dialogue on various
environmental agreements (MEAs)             aspects of the issue”.
and the WTO.
                                               Demanding the inclusion of social
   The Declaration calls for negotia-       issues in the WTO implies opening the
tions on the relationship between           window for never ending non-trade
existing WTO rules and specific trade       issues like gender, human rights,
obligations set out in MEAs, explicitly     animal welfare and social develop-
mentioning that the negotiations shall      ment, all of which fall into the
not prejudice the WTO rights of any         purview of sustainable development.
member that is not a party to the           This contamination of trade with
MEA in question. This means that            non-trade issues certainly does not
trade sanctions by MEA signatories          promote the trade agenda. The argu-
on non-parties are ruled out.               ments from developing countries,
                                            including India, on extraneous and
   After the successful mainstreaming       protectionist nature of these issues are
of environment into the work program        quite understandable and convincing.
of WTO, the next target could well be
labour standards. Many people think
that the issue of trade-labour linkage is
dead, but a close look at the Draft and     Conclusions and Policy
final Ministerial Declaration reveals       Recommendations
that there are grey areas and the issue
may not be entirely dead.                   Considering the complexities and
                                            heterogeneity within the developing
   The final Declaration of Doha            world, it would indeed be difficult to
Ministerial on the issue of labour          suggest one set of policy recommen-
standards states: “We reaffirm our          dations for the South as a whole.
declaration made at the Singapore           Hence, an attempt is made here to
Ministerial Conference regarding            explore possible scenarios and a range
internationally recognised core             of policy options, including trade-offs,
labour standards. We take note of           that would improve the developing
work under way in the International         countries’ negotiating position so as to
Labour Organisation (ILO) on the            arrive at an agreement that would be
social dimension of globalisation”.         better for the South as a whole.
   After careful analysis, the statements      External factors will also determine
in no way rule out a possible role for      how such efforts will move forward.
the WTO on the debate on the social         Increasingly, civil society is inter-
dimension of globalization. More            vening on global trade issues. A raging
importantly, a significant line recog-      debate occupies centre stage with, on
nizes the ILO as a more suitable place      the one side, well-argued proposals
to discuss labour standards has been        aimed at addressing the inequities in
removed from the final declaration.         the trading system from those who
The deleted line reads as: “The ILO         believe that trade is making globaliza-


30
The Doha Development Agenda: The Road Ahead




tion work for the poor, countered on          persistent in negotiations. Secondly,
the other by a vociferous civil society       they should try to forge alliances not
response which believes that trade is         only with developing countries, but
unsustainable and that further expan-         with developed countries as well,
sion of the WTO will only benefit rich        wherever there are common interests,
countries and spell doom for the poor.        such as the Cairns Group24 (an
Secondly, regional and preferential           18-member group of agricultural
trading arrangements are multiplying,         exporting nations which includes
reducing the interest of many coun-           Canada). In other words try to break
tries in the multilateral trading system      the alliances of developed countries.
or efforts to rectify it, if they can cap-    For example, at Doha the EU changed
ture trade benefits through such exclu-       its position on agricultural subsidies
sive arrangements. While these types          when the Cairns Group found
of exclusive arrangements are WTO-            common ground with US interests.
compatible, the excluded countries            Lastly, developing countries should
may challenge them.                           also think strategically, concentrating
                                              on the issues and trade-offs.
   In the short-term, one of the imme-
diate objectives for developing coun-            Developing countries are indeed at
tries is how to extract a better deal out     a crossroads, especially with respect
of the Doha Development Agenda,               to the new issues. Experience with
which is being negotiated at present.         TRIPs and other agreements demon-
Supply-side capacity-building cannot          strate that once an agreement is
be achieved in a short time span.             reached, it is extremely difficult to
                                              modify. Most of the implementation
   Therefore, a long-term, focused            problems could have been avoided
approach is required, since most of           if developing countries had been
the policy agenda associated with             actively engaged in earlier negotia-
trade capacity enhancement is                 tions. If the South is going to be
domestic. It is up to the national            cajoled to sign onto a plurilateral or
governments to devise beneficial              multilateral agreement on any of
policy changes and to set priorities          these issues, it should enter into
in the context of an overall develop-         solid discussions to prevent any
ment strategy and to allocate scarce          harm to its interests.
resources accordingly. In this exercise
they will also need to ensure that the           The South could pressure the
rich countries meet their commitments         developed countries to break away
for aid and assistance, often a               from the “single undertaking”
daunting task.                                approach where member countries
                                              accept all multilateral trade agree-
   As regards the Doha Development            ments. For example, it might accept
Agenda and negotiations to secure             an agreement on competition, which
better market access in the North,            has potential benefits, but the South
developing countries need to try a dif-       could also use competition as a trade-
ferent approach. Firstly, they must be




                                                                                    31
                                                     Canadian Development Report—2003




off to secure gains in other areas, say     Trade facilitation in itself is not a bad
TRIPs or the movement of natural            idea. But negotiators must ensure that
persons. Strategically, the South could     any agreement they finally sign bene-
take part in the negotiating process in     fits all and not only the industrialized
order to push its own agenda, regard-       countries. Poor countries will need
less of its final intention to sign an      operational special and differential
agreement. In any case, there is a high     treatment clauses. The proposed cut-
possibility that an agreement on            off point in this regard, although
competition could be beneficial to          sounding practical, may not be in their
developing countries if negotiated          interests. Moreover, enforcement of
properly. Thus, careful preparation is      the agreement should be linked to the
key to achieving a beneficial outcome.      receipt of capacity-building and tech-
However, the stubborn refusal of many       nical assistance, rather than leaving
developing countries to support and         these to a “best endeavour” clause.
build up the capacity of their own
negotiators, even where there are              On the other hand, the protagonists
sufficient financial and intellectual       of these agreements, especially the
resources available, is a cause             Quad countries, should be sensitive to
of concern.                                 the concerns and experiences of the
                                            developing countries, if they are to
   In the case of investment, develop-      reach any consensus, let alone ensure
ing country opposition stems from an        the success of the multilateral trading
understanding of the issues and             system as a whole.
past experience. The controversial
Multilateral Agreement on Investment
negotiated in the OECD from 1995
was the most sustained and important
effort at creating a multilateral invest-   PRADEEP S. MEHTA is the Secretary General
                                            of the Consumer Unity & Trust Society
ment framework so far. The attempt
                                            (CUTS), a leading research and advocacy
by the 27 rich countries with five          group established in Jaipur, India, in 1984.
developing countries as observers           He has studied Commerce at the Calcutta
ultimately ended in failure. The negoti-    University and Law at the Rajasthan
ations revealed crucial issues and the      University. Mehta is the Chair of the
fate of the agreement holds valuable        Advisory Board of the South Asia Watch
lessons for any future negotiations on      on Trade Economics & Environment
investment. The reservations expressed      (Kathmandu) and a member of the Governing
in this context are not very different      board of the International Centre for Trade
from those of the developing coun-          and Sustainable Development (Geneva).
tries, suggesting they may well find        Among others, he also serves on two
some support on certain aspects.            Government of India committees: the
                                            National Advisory Committee on
                                            International Trade of the Ministry of
  Transparency in government
                                            Commerce and Industry; and the Advisory
procurement may do little to promote        Group on World Trade and Allied Issues of
WTO objectives, but on the other            the Ministry of External Affairs. Mr. Mehta
hand, such negotiations will do little      writes extensively in the Indian press, and
harm if they adhere to transparency.        has published several papers and books



32
The Doha Development Agenda: The Road Ahead




including: Multilateralisation of Sovereignty;   Finger, J. Michael, F. Ng, and S.
Environmental Conditions in International        Wangchuk. 2001. Anti-Dumping as
Trade; All about GATT; Trading Up; Analyses      Safeguard Policy. World Bank Policy
of the Interaction between Trade and             Research Paper 2730. (Washington,
Competition Policy; and a serial publication,
                                                 DC: World Bank).
Globalization and India; Myths and Realities,
which is addressed to the common man in
                                                 Finger, J. Michael and P. Schuler.
India and which helps to clarify many basic
issues about economic reforms and trade          1999. Implementation of Uruguay
liberalization.                                  Round Commitments: The
                                                 Development Challenge. Policy
                                                 Research Working Paper No. 2215,
                                                 Development Research Group.
Select Bibliography                              (Washington, DC: World Bank).

Blackhurst, R., B. Lyakurwa, and                 Fink, C., A. Mattoo, and I. Neagu.
A. Oyejide. 2000. “Options for                   2001. Trade in International Maritime
Improving Africa’s Participation in the          Services: How Much Does Policy
WTO”, World Economy, 23 (4).                     Matter? Policy Research Working
                                                 Paper 2522 (Washington, DC:
CUTS-CITEE. 2002a. Linkages                      World Bank).
between Trade and Non-Trade Issues.
Viewpoint Paper. (Jaipur, India: CUTS            Henson, S., K. Preibisch, O. Masakure.
Centre for International Trade,                  2001. Review of Developing Country
Economics and Environment).                      Needs and Involvement in International
                                                 Standards-Setting Bodies (London:
_____ 2002b. Market Access: The                  DFID).
Major Roadblocks. Briefing Paper
No. 2/2002, Jaipur.                              Hoekman, B. 2002a. Strengthening
                                                 the Global Trade Architecture for
_____ 2001. Framework for Fair Trade             Development (Washington, DC: World
and Poverty Eradication. Briefing Paper          Bank and Centre for Economic Policy
No. 4/2001, Jaipur.                              Research).

Deardorff, A. 2001. “International               _____ (2002b). Economic
Provision of Trade in Services, Trade            Development and the WTO after
and Fragmentation.” Review of                    Doha (World Bank and CEPR)
International Economics.
                                                 Hoekman, B., F. Ng, and M. Olarreaga.
Evenett, Simon J. 2002. “Multilateral            2001. Eliminating Excessive Tariffs on
Disciplines and Government                       Exports of LDCs. Working Paper No.
Procurement” in B. Hoekman,                      2604. (Washington, DC: World Bank).
A. Mattoo and P. English (eds),
Development, Trade and the WTO:                  ITCB. 1999. Agreement on Textiles &
A Handbook (Washington, DC:                      Clothing: Evaluation of Implementation
World Bank).                                     (Geneva: International Textiles and
                                                 Clothing Bureau).



                                                                                       33
                                                   Canadian Development Report—2003




Laird, S. 2002. “Market Access Issues      Panagariya, A. 2002. “Developing
and the WTO: An Overview” in               Countries at Doha: A Political
B. Hoekman, A. Mattoo and P. English       Economy Analysis” World Economy,
(eds), Development, Trade and the          forthcoming.
WTO: A Handbook (Washington, DC:
World Bank).                               Shin, Yukyun H. 2001. “New Round
                                           and Trade Facilitation—Proposing a
Levenstein, M. and V. Suslow. 2001.        Tentative Draft Agreement on Trade
“Private International Cartels and Their   Facilitation Measures” Journal of
Effect on Developing Countries.”           World Trade, vol. 35, no. 2,
Background Paper for the World             pp. 229-52.
Bank’s World Development Report
2001, January 9.                           Stern, Robert M. 2002. “Quantifying
                                           Barriers to Trade in Services” in
Malhotra, K. 2002. Doha: Is It Really a    Hoekman, et. al, Development, Trade
Development Round? (Washington,            and the WTO.
DC: Carnegie Endowment for
International Peace).                      UNCTAD. 2002. The Least Developed
                                           Country Report 2002 (New York:
Mehta, Pradeep S. 2002. WTO and            United Nations).
India: An Agenda for Action in Post
Doha Scenario (Jaipur, India: CUTS         Wilson, John S. 2002. Liberalising
Centre for International Trade,            Trade in Agriculture: Developing
Economics & Environment).                  Countries in Asia and the Post-Doha
                                           Agenda (Washington, DC: World
OECD.1999. Post-Uruguay Round              Bank).
Tariff Regimes: Achievements and
Outlook, Paris.                            _____ 2001. Bridging the Standards
                                           Divide: Recommendations for Reform
_____. 2001. The Uruguay Round             from a Development Perspective
Agreement on Agriculture: An               (Washington, DC: World Bank).
Evaluation of its Implementation in
OECD Countries, Paris.                     World Bank. 2001. Global Economic
                                           Prospects and the Developing
Olarreaga M. and F. Ng. 2002. “Tariff      Countries 2002, Washington.
Peaks and Preferences”, in Hoekman,
et. al, Development, Trade and the         _____ 2000. World Development
WTO: A Handbook.                           Report 2000, Washington.

Oyejide, A. 2000. Interests and            WTO. 2001a. International Trade
Options of Developing and Least-           Statistics 2001, Geneva.
Developed Countries in a New Round
of Multilateral Trade Negotiations.        _____ 2001b. Market Access:
G-24 Discussion Paper Series No.2          Unfinished Business, Post-Uruguay
(New York: United Nations).                Round Inventory and Issues, Geneva.




34
The Doha Development Agenda: The Road Ahead




Footnotes                                         Development, Trade and the WTO:
                                                  A Handbook (Washington: World
1 The author acknowledges the research            Bank, 2001).
  assistance provided by Pranav Kumar
  and Nitya Nanda of CUTS in writing           12 Hoekman, et. al, Development, Trade
  this paper.                                     and the WTO, 2001.

2 The North-South Institute, Canadian          13 WTO, International Trade Statistics
  Development Report 2000, Ottawa.                2001, Geneva, 2001a.

3 A. Panagariya, “Developing Countries         14 Jha 2001.
  at Doha: A Political Economy
  Analysis.” World Economy, 2002.              15 J. Michael Finger and P. Schuler,
                                                  Implementation of Uruguay Round
4 Oxfam, Rigged Rules and Double                  Commitments: The Development
  Standards: trade, globalisation, and the        Challenge. Policy Research Working
  fight against poverty, London, 2002.            Paper No. 2215, Development
                                                  Research Group (Washington, DC:
5 Geographical indications identify a             World Bank, 1999).
  good as originating in a specific coun-
  try or region, where a given quality or      16 The “green room” is the name given to
  reputation of the product is attributable       the traditional method used in the
  to its geographical origin. (ex. wines)         GATT/WTO to expedite consultations.
                                                  It involves the Director-General and a
6 Panagariya, 2002.                               small group of Members, numbering
                                                  between 25 and 30 and including the
7 Amphora 2002.                                   major trading countries, both industrial
                                                  and developing.
8 Multifunctionality refers to the fact that
  an economic activity may have multi-         17 S. Henson, K. Preibisch, and
  ple outputs and, by virtue of this, may         O. Masakure, Review of Developing
  contribute to several societal objec-           Country Needs and Involvement in
  tives at once. Multifunctionality is thus       International Standards-Setting Bodies
  an activity-oriented concept that refers        (London: Department for International
  to specific properties of the production        Development, 2001); John S. Wilson,
  process and its multiple outputs.               Liberalising Trade in Agriculture:
                                                  Developing Countries in Asia and the
9 UNCTAD, The Least Developed                     Post-Doha Agenda (Washington: World
  Country Report 2002 (New York:                  Bank, 2002).
  United Nations, 2002).
                                               18 A. Deardoff, “International Provision
10 B. Hoekman et. al 2002. Development,           of Trade in Services, Trade and
   Trade and the WTO: A Handbook,                 Fragmentation”, Review of
   World Bank, Washington. 2002.                  International Economics, 2001;
                                                  Robert M. Stern, “Quantifying Barriers
11 M. Olarreaga and F. Ng, “Tariff Peaks          to Trade in Services” in Hoekman et.
   and Preferences,”in B. Hoekman,                al, Development, Trade and the WTO,
   A. Matoo, and P. English (eds),                2002.




                                                                                        35
                                                     Canadian Development Report—2003




19 B. Hoekman, Economic Development         23 Simon J. Evenett, “Multilateral
   and the WTO after Doha (Washington:         Disciplines and Government
   World Bank and CEPR, 2002).                 Procurement” in Hoekman, et. al,
                                               Development, Trade and the WTO,
20 M. Levenstein and V. Suslow, “Private       2002.
   International Cartels and their Effect
   on Developing Countries”.                24 The Cairns Group includes: Argentina,
   Background Paper for the World              Australia, Bolivia, Brazil, Canada,
   Bank’s World Development Report             Chile, Colombia, Costa Rica, Fiji,
   2001, January 9, 2001.                      Guatemala, Indonesia, Malaysia, New
                                               Zealand, Paraguay, Philippines, South
21 See www.wto.org/english/tratop_e/trad-      Africa, Thailand, Uruguay.
   fa_e/tradfac2_e.htm

22 Yukyun H. Shin, “New Round and
   Trade Facilitation - Proposing a
   Tentative Draft Agreement on Trade
   Facilitation Measures.” Journal of
   World Trade, vol. 35, no. 2 (2001),
   pp. 229-52.




36