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Vol.
XXVII No. 28
July 13,
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Stakes
In Cancun
WTO
Ministerial Meeting
Amit Sen
Gupta
THE Fifth Ministerial meeting of
the World Trade Organisation is to be held in September in Cancun, Mexico. The
Cancun meeting follows the meeting held in Doha in 2001 and is being seen as the
possible site for a major confrontation between the proponents of imperialist
globalisation and its victims. The WTO, since its inception in 1995, has been
the battering ram of imperialism. In the current phase of globalisation,
characterised by attempts to integrate capital flows, markets and production,
the WTO has been the moving force in liberating the market.
The heady euphoria drummed up in favour of globalisation with the coming
into force of the WTO in 1995 and its so-called rule based governance of
global markets has dissipated in the last eight years. The collapse of the East
Asian economies in 1997, the collapse of global stock markets in 2001 and the
debacle in the Seattle meeting of the WTO in 1999 have led to even the most
strident votaries of globalisation scurrying for cover. This does not however
mean that imperialist globalisation is on its deathbed. To the contrary,
attempts to resurrect it are afoot. It is in this background that we need to
examine the issues at stake in the Cancun WTO meeting.
NEW
ISSUES AT CANCUN
It may be recalled that the Doha
meeting of the WTO had ended with the virtual setting up of a new round of
negotiations. While developing countries had opposed this, the agenda was
finally pushed through on the last day of the meeting. The new issues (also
called Singapore issues as they were first introduced at the Singapore
Ministerial meeting of the WTO in 1997) are: investment, competition policy,
government procurement, and trade facilitation. These issues are designed to
deepen and intensify the predation of global capital. Let us first examine what
some of these issues imply. Alongside this is the attempt to accelerate the
ongoing negotiations under the General Agreement on Trade in Services (GATS).
Historically trade agreements
involved reducing tariffs, eliminating trade barriers like quotas on imports on
goods produced in a country and sold elsewhere. However, this has changed
drastically in recent years as, in developed countries, manufacturing has ceased
to be profitable because of global competition. Presently, the services sectors
have expanded and are growing at the fastest rates in these countries. The
service sectors account for two thirds of economy and jobs in the European Union
(EU), almost a quarter of the EUs total exports and a half of all foreign
investment flowing from the Union to other parts of the world. In the US, more
than a third of economic growth over the past five years has been because of
service exports.
As the service sectors of the
economies of developed countries grew, exports of various types of services
increased. Multinational Corporations started lobbying for new trading rules
that will expand their share of the global market in services as governments
everywhere spend a considerable amount of their budget on social services.
This is what the General
Agreement on Trade in Services (GATS) under the WTO is targeting today. GATS
covers some 160 separate sectors. In the WTO meeting in Seattle, the US
specifically wanted to focus on free trade in services in the professions,
health and education.
The GATS
as in all the other agreements contains provisions which allow further
deregulation of any national legislation which is seen to be hostile to free
trade. GATS
identify the specific commitments of member states that indicate on a
sector-by-sector basis the extent foreigners may supply services in the
country. The negotiating process in GATS allows for countries to decide, through
request offer negotiations, which service sectors they will agree to cover
under GATS rules. This refers to the extent to which member states want their
services like health and education to be open up to free trade.
In the Third World, much of
private services in areas like health and education were provided by
non-governmental organisations like charities, religious societies and community
oriented associations, which were not entirely profit driven. This will change
when with the new dispensation and the corporate sector is poised to play a
prominent role especially in countries where there is an affluent elite willing
to pay or where there exists a private base in these areas: like in India. This
move to open up the social sectors to allow for privatisation and competition
from the private sector will mean private corporations taking over the social
services of countries for profit, undermining their equitable distribution.
If developing countries commit to
fully cover social sectors like education and health under the existing GATS
rules, this will lead to irreversible changes in the financing and delivery of
these services. Governments will have to open up these sectors to foreign
service providers. Foreign providers will be guaranteed access to the services
market, which includes the right to invest, to provide these services from
abroad and to send professionals to practice. Any preferential treatment for
local institutions will have to be eliminated or given to foreign service
providers. Requirements that first
preference be given to locals will be eliminated. Conditions must be created for the private sector to provide
or supply any service; the private sector will effectively tap funds that the
government spends on social sectors.
GOVERNMENT
PROCUREMENT
Under the proposed Agreement
on Government Procurement Policy the developed countries wants to introduce a
process in the WTO whereby their companies are able to obtain a large share of
the lucrative business of providing supplies to and winning contracts for
projects of the public sector in the Third World. The aim is to bring government spending policies, decisions
and procedures of all member countries under the umbrella of the WTO, where the
principle of national treatment will apply.
Under this principle, governments would no longer be able to give
preferences or advantages to citizens or local firms. Through the government
procurement issue, the North will enable its corporate bodies to tap the vast
public resources available in the health and social services sector and
dismantle the public provision of health care. Public procurement will be
the golden goose providing the crucial link to open up the services sector.
COMPETITION
POLICY
Privatisation
in different sectors will also be facilitated under the proposed Agreement on
Competition Policy. Member states will have to consider making reforms to
their regulatory regimes such that national regulations should have four
central attributes: adequacy, impartiality, least intrusiveness and
transparency, towards corporate interests. Under such an agreement,
developing countries would be forced to establish domestic competition policies
and certain type of laws. Distinctions that favour local firms and investors
would not be allowed. For example,
if there are policies that give importing or distribution rights (or more
favourable rights) to local pharmaceutical companies (including government
agencies or enterprises), or if there are practices among local firms that give
them superior marketing channels, these are likely to be targeted and even
banned. If smaller Third World enterprises were treated on par with the large
foreign conglomerates, they would not be able to survive. The North will insist
that their giant firms be provided a level playing field to compete
equally with smaller domestic companies. Competition of this type will
invariably lead to foreign monopolisation of Third World markets.
INVESTMENT
ISSUE
Similarly on the investment
issue, the Northern governments want to introduce new rules that make it legal
to give foreign investors the right to enter and establish themselves with 100
per cent ownership. Governments then will lose the right to regulate investment
to achieve and protect social, environmental and health well being in the
national interestboth in the long term and in the short term.
THE
DEVELOPMENT AGENDA
While developed countries are
keen to push ahead with the road-map they had prepared in Doha, developing
countries are understandably loath to allow this to happen. They, on the other
hand, are trying to remind the WTO of its promise in Doha to accelerate the
development agenda of the WTO. Unfortunately,
it is precisely on these issues that the least progress has taken place since
Doha. There has been no discernible progress in the areas of agriculture, TRIPS
and health and Special and Differential Treatment (SDT).
In agriculture, developed
countries continue to subsidise their own agriculture sector while demanding
that tariffs be reduced by developing countries. In other words, what they
continue to say is: open our markets for our produce but we will continue to
protect our markets. The Doha declaration on Trade Related Intellectual Property
Rights (TRIPS) and Public health had required that a solution be found that
would enable countries with no manufacturing capabilities to import drugs at low
prices that may be produced in countries like India. In the last two years the
drug industry, led by US based corporations, has systematically scuttled all
proposals designed to ensure this with full connivance of the US government.
Special and Differential Treatment implies that developing countries be
exempted from obligations, or be able to choose their own rate of implementing
the obligations, or having a lower level of obligations vis a vis the different
provisions of the WTO. There has been no movement in this area and the best that
developed countries are able to say is that this has happened because developing
countries have been unable to define areas where they wish to avail of such
treatment.
The task of developed countries
has been made more difficult because of differences within them in vital areas,
leading to a virtual stalemate in some areas. This is most apparent in the area
of agriculture where the US is unhappy over the reductions in tariffs offered by
the European Union and Japan.
GROWING
RESISTANCE
A ploy that is now being used by
the developed countries is to say that the development issues should be
delinked from the new issues. In other words saying that developed
countries should submit themselves to further negotiations on new issues that
would deepen integration of markets, but should not expect any concessions in
return. Faced with the resistance from developing countries on the new
issues there is also a suggestion being mooted that the four issues could be
unbundled, i.e. they could be negotiated separately and not as a package as was
earlier proposed at the Doha Ministerial meeting in 2001. The major ploy that
will definitely be used by the developed countries would of course be to attempt
to divide the developing countries. Theoretically, the WTO works on a one
member, one vote principle. If developing countries remain united, no
proposal detrimental to their interests can be pushed through. Unfortunately
the decision making process in the WTO has been subverted by introducing the
so-called consensus method of reaching decisions. What this actually means
is that developing countries are forced to take positions because of bilateral
pressures that they face from the US and its allies.
Today
there appears to be a higher degree of determination amongst developing
countries to block proposals from the developed countries. Latin American
countries, led by Brazil, have been especially vocal in this regard. African
countries too are increasingly coming together as a single negotiating block. That
leaves the two largest countries in the world – India and China – whose
positions in Cancun could well be decisive. China, till recently, had focused
its energies on joining the WTO – which they did only a couple of years ago. Now
having joined the WTO, China appears more willing to make common cause with
developing countries.
Indias position is more
complex. During the meeting in 1999 in Seattle, India clearly betrayed the cause
of developing countries and the fiasco in Seattle happened in spite of Indias
role. Since Seattle, the Indian delegation to the WTO has been perceptibly
better prepared. This was evident in the meeting in Doha in 2001. But even in
Doha, after holding out till the end, India succumbed on the last day.
Negotiating teams, after all, have to ultimately take positions based on signals
they receive from the government of the day. The NDA government succumbed in
2001. The moot question is, will it do so in 2003 again? Pre-Cancun, some brave
statements have been made by the government that seem to indicate that they will
not surrender in Cancun. For example, Indias Permanent Ambassador in the WTO
has said recently that the issue of investments should be dropped from the
agenda of the WTO after Cancun. But can a government that today wants to send
troops to Iraq to fight under the command of US forces, take an independent
position in Cancun. The world will be watching.
