A perspective of Caribbean non governmental organisations and civil society on governance and trade and economic relations in international trade negociations.
(CARIBBEAN POLICY DEVELOPMENT CENTRE/CARIBBEAN REFERENCE GROUP)
The opposing, and seemingly contradictory, currents of globalisation and marginalisation met in Seattle in the northwestern United States in November/December 1999. It was here the architects of the world trading system, the member governments of the World Trade Organisation, were holding their third Ministerial Conference, following similar meetings in Singapore in 1996 and Geneva in 1998. This was also where the impressive achievements of world trade and output growth of the last fifty years were to be heralded, and a new round of talks (the ‘Millennium Round’) launched. This meeting would therefore serve to cement past accomplishments, carry forward remaining items on the ‘in-built agenda’ of the organisation, and formally launch talks to work for international agreement on liberalisation in the areas of investment, government procurement, and competition policy.
Seattle, however, was also where developing country governments, along with significant civil society voices from the North and South, had come to make known their displeasure at the pace and process of trade negotiations and its unbalanced, and sometimes marginalising, impacts on different economic and social groups in their countries. That the existing process could not accommodate these different viewpoints is a hard lesson well learnt. Caribbean non-governmental organisations and civil society must now record their position on these matters and offer suggestions for the way forward.
This study aims to provide a perspective on global trade negotiations, specifically on governance and trade and economic relations, that is informed by specific interests of Caribbean NGOs and civil society. It begins in Chapters I and II by assessing the historical context and institutional structures within which trade negotiations have taken place over the past fifty years. Some description of the nature and structure of the World Trade Organisation is also provided. Chapter III is also contextual, providing a review of different modes of interaction between NGOs and civil society and international agencies. From this will be drawn important lessons of possible structures and approaches upon which Caribbean NGOs can base their interventions. Following this, Chapter IV identifies and prioritises some key issues affecting Caribbean NGOs and civil society and the claims they need to make for review, repair and reform of the trade liberalisation process. Justifications for these claims arise in an assessment of the impacts on affected sectors. Because of the dynamic nature of the trade liberalisation process and the indicated need for more detailed impact assessments, the list of critical issues is not exhaustive.
The closing Chapter V addresses specific actions to be taken on the part of both Caribbean NGOs and key players in international trade negotiations, including the WTO itself. It concludes by detailing the core elements of an advocacy strategy that would influence a reform agenda. This is necessary now more than ever, in a post-Seattle world, to restore confidence in the process and thereby ensure more meaningful participation by civil society actors. Confidence would undoubtedly be boosted by a slowing of the pace of trade liberalization, more effective illustration on the part of the WTO of the benefits to developing countries from deepening the process, and a recognition that, in many cases, liberalization does not always trigger sustained growth and development.
In terms of method, the study is the result of basic research, involving the review of selected international agreements and other official documents, journal articles, and a host of CSO position papers, Caribbean and otherwise. The researchers also benefitted from attendance at a consultation in September 2000 in Trinidad and Tobago on Civil Society and the FTAA. As well, valuable comments on an early draft were received from CPDC members including ADA and WINFA, and from ACE and the CPDC/CRG organisation. While beyond the scope of this study, additional primary research, perhaps involving a polling of cross-sectional Caribbean CSO views, may strengthen or make more nuanced the stated conclusions.
The study finds that major reform of the trade liberalisation process is necessary because, from a Caribbean CSO perspective, the current approaches do not work. Caribbean CSOs find themselves excluded from a position of influence of national, regional and international arrangements. Various models of CSOs participation in, and dialogue with, the trade architecture indicate that a minimum necessary condition is the issuance of a clearly articulated mandate or policy statement on CSO exchange, followed by the development of operational guidelines. However, the deepest thrust must be to exact a mainstreaming of CSO concerns, from the gender, environment and sustainable development perspectives, into the technical, economic and social frameworks of official policy.
The study also finds that the interests of Caribbean CSOs lie in the specific areas of agriculture, textiles, tourism, finance, telecommunications and information technology, culture and entertainment, and intellectual property. They should therefore urge that caution be applied to further liberalisation efforts in these and other sectors.
Finally, the study reveals that the interests of Caribbean CSOs can best be served and protected if reform occurs at all levels of the process. Thus, specific recommendations relate to the WTO, the Caribbean’s negotiating machinery, and CSOs themselves.
Specifically, Caribbean CSOs should urge a democratisation of the WTO, in terms of its operational and administrative processes and its approaches to trade negotiations. They must insist that the practice of informal agenda setting be eliminated. Institutionally, the original desire for the trade body to dialogue with all interested parties, including civil society representatives, should be resurrected. CSOs should also recommend that the existing trade policy review mechanism be expanded to provide a review of specific economic outcomes of previous measures and agreements, as a precursor to new talks. They should also argue that, rather than a rush to deepen the existing liberalisation agenda, the WTO must seek to broaden its approach by mainstreaming gender, environment and sustainable development analyses within its work.
In respect of regional arrangements, Caribbean CSOs should recommend greater transparency and outreach in terms of approach, and a focus on research on the competitiveness of, and liberalisation impacts on, particular sectors to better inform negotiating positions. Openness should also extend to fostering greater public debate on matters of trade. Finally, the study recommends, both for states and CSOs, the forging of regional and international strategic alliances to strengthen negotiating positions.
Despite the apparent efforts at inclusion and other special considerations, developing countries have numerous complaints regarding the operation of the WTO system. Some of these are systemic issues relating to governance, while others relate to specific examples of unequal treatment and imbalances built into the agreements. Other issues concern the implementation of the provisions of the agreement and unequal sharing of the burden of adjustment, and the uncertainty of hoped-for benefits from commitments made by the developed countries. Further, the capacity of developing countries, in particular LDCs, to implement another complex array of trade liberalisation rules has been severely stretched and is non-existent in many cases. In sum, it seems fair to say that development has been increasingly shunted to the back burner of the liberalisation agenda or worse, it has been subsumed under trade rules and financial policies that in fact are working against development.
Indeed, ongoing debate surrounds both the theoretical and practical approaches of liberalisation, buttressed by evidence that countries of the North continue to practice less obvious forms of protectionism even as they exhort the South to do otherwise. The continued protection of developed country markets to labour intensive products of, and free movement of labour from, the South brings into question the former’s belief and commitment to ensuring a truly global diffusion of the gains from trade. As well, it reveals the asymmetrical nature of the process as the more powerful North seeks to enforce an agenda largely determined by self-interest with little room for input and influence by developing countries.
The conclusions of this study suffer somewhat for availability of information especially with respect to the Spanish- and French-speaking Caribbean countries. In particular, the review of models of interchange between civil society organisations (CSOs) and the trade negotiations process would have benefited much from examples from these countries. In its absence, tentative conclusions are offered. A second constraint was the limited time available to the researchers. Together, these limitations prevent the full articulation, in Chapter IV, of sectoral impact assessments of the areas chosen. In some cases, secondary research is nonexistent and only theoretical justification for their inclusion on the list is offered. Again, future research must serve to close this gap.
In terms of future research this study suggests that the analysis of modes of government-CSO interaction be expanded to other international, regional and national arrangements. The United Nations system, in particular, has a long history of working directly with civil society through specialised agencies. Practical examples for incorporating their views upstream the policy process may be drawn. Other consultative processes also require a fuller examination, including those of the European Union (EU) and the African, Caribbean and Pacific countries (Lomé old and new) and the North American Free Trade Agreement (NAFTA). Next on the agenda must be impact assessments of greater opening to trade, both on the levels of the macroeconomy and at the micro/sectoral level. Here is required impact assessments that reject the supposed neutrality of trade issues and explicitly adopt the perspectives of gender, labour, social development and the environment. Third, future research must be directed to study the ‘new-new’ issues in trade, such as the health and environmental dangers posed by genetically modified (GM) crops. Finally, some examination of the difficulties encountered by small, resource poor and economically lagging countries in the integration processes of the North would also serve to inform the debate among Caribbean CSOs and their governments.
Strategically, in terms of advocacy, the study recommends that the Caribbean Policy Development Centre and the Caribbean Reference Group, on behalf of its membership, should:
– Lobby for greater democratization of the WTO, especially in the determination of agenda items.
– Lobby for the institutionalization of entry and enquiry points for greater civil society contact and dialogue.
– Advocate for an expanded and deepened review process as a precursor to new talks.
– Insist that gender, environment and sustainable development methodologies be made central elements of ongoing trade negotiations.
– Lobby for greater dialogue, accountability and transparency in CARICOM and the Regional Negotiating Machinery and for a more proactive role in determining negotiation mandates and the regular monitoring of progress in negotiations.
– Craft and popularize critical analyses of adopted negotiating positions.
– Design and implement popular education methods to raise awareness of the significance of the trade negotiations process to social and economic development and to increase economic and trade literacy for broad cross-sections of society, including key decision makers in government, business and civil society.
– Lobby for the RNM to broaden its mandate to include greater popular understanding of the process and implications of trade negotiations.
– Insist on a higher prioritization for industry and sectoral research in the work programmes of the RNM, regional governments and national trade and development agencies.
– Develop expertise in research assessments employing the relevant methodologies of gender, environment and sustainable development.
– Lobby for and engage in consultations on the trade negotiations process at the regional and national levels.
– Engage in institutional strengthening measures to more effectively impact the trade negotiations process.
– Pursue operational economies and greater autonomy to ensure a sustainable presence in the process of trade negotiations.
– Establish more effective CSO groupings, perhaps along thematic or geographic lines, for participation at every level of activity of the multilateral trade system.
– Continuously develop greater expertise in the technical, administrative, legal and regulatory issues that constitute the fabric of trade negotiations.
At this time, the thrust for consensus in respect of a new round of talks should not be supported by Caribbean CSOs until the many concerns outlined in this study have been addressed.
I. AN INTRODUCTION TO THE MULTILATERAL TRADING SYSTEM
This chapter focusses on the intellectual foundations, evolution and framework of the multilateral trading system. It discusses the issue of governance of the system through a summary assessment of the interactions between the International Monetary Fund, the World Bank, and the General Agreement of Tariffs and Trade/WTO and the emerging web of regional trade agreements. It also identifies the mechanisms and processes which distinguish the current phase of globalisation from previous arrangements.
I.1 The Contemporary Multilateral Trading System
The intellectual foundations of the contemporary system can be traced back to the positivist view of the benefits of trade developed by Adam Smith and David Ricardo, the former espousing the principle of absolute advantage and the latter the more general principle of comparative advantage. While today there are differing views as to the sources of comparative advantage, including for example geography, climate, factor endowment, technology or institutions, the ideology of free trade dominates trade discourse and is the foundation on which trade rules are negotiated. Free trade was a political ideology to counter the then reigning ideology of protectionism linked to the paradigm of mercantilism which dominated international trade up until the 18th Century. Mercantilists argued that trade was a win-lose proposition: a country grew rich at the expense of its neighbours, and thus the best strategy was to try to export as much as possible while protecting your domestic market (and balance of payments) from foreign goods.
In the 1800s the mercantilist view was significantly challenged by theorists such as Adam Smith and David Ricardo who argued that international trade could be a win-win proposition. This was possible, they argued, if two conditions were in place: (1) each country specialised in producing and selling the goods that it could produce more efficiently relative to another country (the law of comparative advantage), a sort of international division of labour; and (2) free and unregulated flow of goods among and between countries, a sort of international laissez faire. Once these two conditions were in place, free traders argued that there would be mutual gains for all. These potential gains would accrue from the increased productivity due to specialisation.
The main tenets of this free trade consensus are that: (1) the free movement of goods, services and capital are in the best interest of the world; (2) it promotes economic growth and the maximum efficient use of the world’s resources; and (3) ultimately, every country will gain. As a result, free trade has become sacrosanct.
In the 1950s the dominant view of trade was that it was essentially a win-win proposition but that countries could take certain strategic measures and stabilisation policies to bolster their competitive position, protect jobs and reduce trade deficits. These strategic measures were backed by economic and welfare maximizing analyses such as the terms of trade, the theory of second best and the infant industry arguments.
Throughout this period a certain level of social cohesion was maintained by the Keynesian consensus which engineered a concord between workers and the business sector to redistribute some of the largesse of capital accumulation in terms of wages and social welfare programs. Within this framework northern governments fine-tuned the economy to ensure full employment and provide a social safety net. That the rampant exploitation of the developing countries as well as the labour of certain sectors within OECD economies (notably women and people of colour) attained much of the largesse of the capital accumulation was never fully appreciated.
The current version of free trade associated with the neo-liberal paradigm posits an automatic link between trade liberalisation, growth and development. Thus, trade liberalisation is viewed as the only possible option for growth, and there is no justifiable rationale for any form of restrictions on trade. Any governmental regulation that affects the right of exporters/importers and investors to sell their product in a domestic market is trade distorting and is prohibited. In this framework, the balance of payments is not a constraint to free trade because of the free flow of capital, in particular foreign direct investment.
Together with fiscal discipline, tax reform, re-direction of public expenditure, financial liberalisation, a single competitive exchange rate, the elimination of barriers to foreign direct investment, privatisation of state owned enterprises, deregulation of domestic markets, and securing property rights, trade liberalisation has become part of the standard policy and analytical framework for international economic policy making. This framework was formalised and implemented in developing countries through structural adjustment programs designed to manage the international debt crisis of the 1980s but which also served as a lever for prying open domestic markets and providing the ground-laying for a trade liberalisation agenda that was consolidated under the current trade liberalisation regime.
However, despite an analytical framework that is supportive of trade liberalisation and loud protestations about the (absence of) benefits of trade liberalisation, the empirical reality is that the rich countries protect their vulnerable and traditional sectors (agriculture and clothing and textiles among them) by a host of protective devices include anti-dumping actions, Sanitary and Phyto-Sanitary (SPS) technical barriers to trade (TBT) measures, subsidies and quotas. They have also taken proactive measures, such as the trade related intellectual property rights and certain provisions with the services agreement of the WTO, to protect their emerging industries of services and information technologies for example. At the same time, the institutional framework of trade governance promotes trade liberalisation at all costs by instituting a set of rules that straight-jackets developing countries and prohibits them from utilising tools that were critical to the development and continued growth dynamics of the developed countries. Thus the burden of liberalisation is shunted to the poorer developing countries.
The term ‘multilateral trading system’ (MTS) refers broadly to the activities of trading entities and economic agents at the global level. The main actors are importers, exporters, investors, workers (paid and unpaid, formal and informal), producers and consumers. The rules of engagement and governance of institutions in the MTS are set by nation states, which have played varying roles as actors themselves or as facilitators of the multiple activities of the system. Thus, the MTS governs the operation and the interaction of national markets at the global level. The specific development of a multilateral, as distinct from bilateral and regional framework as an approach to organising trade relations, therefore refers to attempts to co-ordinate the processes of interactions and to establish rules of the game to facilitate the orderly process of trade and growth.
This process of subsuming bilateral, trilateral and other forms of negotiations under a multilateral framework is what we now commonly refer to as the MTS. It denotes an over-riding philosophical and ideological orientation, with a set of assumptions, guiding principles, outcomes and expectations which underpins an institutional framework for agenda setting, rule making and governance. Together these constitute a particular trade regime for the facilitation of trade between nations.
Following the devastation of Europe after World War II and the ensuing economic turmoil, the major world economic powers embarked on a process of restoring economic prosperity and strengthening global capitalism. The Bretton Woods Institutions (BWIs) were devised to establish a system which would provide a more permanent and acceptable framework for international transactions, while at the same time promoting a world of full employment and economic growth. It was intended that the emerging multilateral system would generate benefits equally for the economies of both industrial and developing countries.
The talks at Bretton Woods resulted in an agreement to establish three international organisations in 1945 which would preside over the world economy, including the International Monetary Fund and the International Bank for Reconstruction and Development (World Bank). The third body proposed was an International Trade Organisation.
The proposed International Trade Organisation was intended to be the complementary institution to the IMF and IBRD economic management process, focusing on the regulation of international trade, with an emphasis on the reduction of duties on traded goods and services, rules on employment, restrictive business practices and international investment. In response to charges of excessive supranationalism, the International Trade Organisation was never ratified and, in 1947, the General Agreement on Tariffs and Trade (GATT) emerged in its place as a looser, more informal arrangement in which countries would pursue a multilateral trade agenda.
The GATT rules represented a set of arrangements for reducing and limiting barriers to trade, as well as the establishment of a mechanism for settling international trade disputes on the basis of reciprocity. Though never formally an organisation, the GATT was able to conduct eight rounds of multilateral trade negotiations which targetted progressive trade liberalisation and widening membership. Over forty-eight years these rounds addressed international market access issues, principally through the removal of tariffs and later non-tariff measures on merchandise goods. The Uruguay Round, conducted from 1986 to 1993, was the most extensive and far reaching, addressing, in addition to trade in goods, intellectual property rights, services, and revisiting commitments in textiles and agriculture. It also created the World Trade Organisation which has replaced the GATT in facilitating trade rules and adherence to these rules. The WTO along with the IMF, the World Bank and regional development banks have become the key facilitators of the ongoing globalisation process.
Thus the development of the trade regime is inextricably intertwined with a broader system of global governance and international economic policy making issues, which are consistent with and integral to the process of global integration. In fact the trade regime has become a key facilitator and promoter of globalisation. The system of global governance, whether in finance, trade or investment, has been evolving over time in a framework in which globalisation, as a historical process, is marked by different phases of integration of national economies.
This means that the particular orientation, the rules that are set and the process of governance, including the mechanisms of enforcement of each phase, are determined in most cases by the nature of the expansion of the major powers. The institutional framework of the multilateral trading system has therefore adapted over time to the specific needs and requirements of the over-riding global integration process and the specific values and ideological shifts that accompany that process. Since the middle of the twentieth century that process has been primarily American driven, but has had the support and active involvement of a number of supporting actors including Britain, the EU and the collective persuasion of the G-7 . Consequently, the character and features of globalisation have differed across historical periods.
I.2 The Institutional Framework of the Multilateral Trading System
The different phases of globalisation necessitated different changes in institutional processes and mechanisms for governance of the system, including a process of co-ordination (albeit not the invisible mechanism so much lauded in the domestic economy) but a more visible governance process. In many prior phases there was need for a source of power to implement rules of the game, however informally or formally derived. This necessitated the emergence of a strong power, a role that was played by Britain up until the end of the 19th Century, with gold and the pound sterling as the lubricant of trade and the British Navy as a key enforcement mechanism. In the 1940s, this role shifted to the US. The Bretton Woods monetary system and the creation of the GATT were examples of a new multilateral institutional framework for global governance. Today, the IMF and the World Bank are complemented by a network of regional banks with a development focus but inextricably tied to a trade liberalisation framework. In addition, the trading system is facilitated by a network of bilateral, regional and quasi regional arrangements on aid, development and trade co-operation assistance such as the Lomé (now ACP-EC, Cotonou) agreement, the African Growth Opportunity Agreement, the Caribbean Basin Initiative (now the Caribbean Basin Trade Partnership Act-CBTPA), as well as an increasingly complex array of preferential trade arrangements, from the more limited free trade agreements such as NAFTA-US-Canada-Mexico and the European Free Trade Association (EFTA) to the more integrated economic union of the European Union, being aggressively pursued by the developed countries.
The developing countries have responded to the actions of the US and the EU by setting in motion their own regionalization processes. In Africa these include the Southern African Development Community (SADC) and the SADC Free Trade area , Common Market for Eastern and Southern Africa (COMESA) and ECOWAS. MERCOSUR covers the larger economies of South America while the Caribbean’s CARICOM is in a transition towards a Caribbean Single Market and Economy (CSME). Finally, in Asia there exist AFTA, APEC, and the Association of South East Asian Association Nations (ASEAN).
For the most part these arrangements are modelled after the prototypes laid down by the North. Since, in many instances, these arrangements, especially the FTAA negotiations, are more restrictive in terms of identifying prohibited activities and encompassing areas, such as investment, than those existing at the multilateral level. Thus these regional arrangements not only complement but sometimes drive the trade liberalisation process at the multilateral level. The major developed countries in their various formations as the G-7, the Quadrilaterals (the Quad–US, EU, Japan and Canada), and the OECD are the main agenda setters. The developing countries individually and in their coalitions as the G-77, the G-24 etc, supported by UNCTAD, form another layer of texture since they play the dual roles of the governed as well as participants in WTO rule making.
The IMF was originally established to encourage cooperation among states, and thereby to avert recession and protectionism on a world scale, by discouraging individual countries from pursuing policies that would cause disequilibrium in the international monetary system. In this context the Fund played three important rules: 1) it operated as a balance of payments adjustment institution, committing members to compensate for imbalances by means other than the use of exchange rates, or protectionist trade measures; 2) it acted as a financing institution, providing short-term loans of one to three years to support balance of payments adjustment measures; and third, it served as the focal point of a rule based international system of macroeconomic policy coordination and exchange rate control. However, after the debt crisis of the 1980s, the IMF’s role was expanded to include both a financing and adjustment lending via its conditionality based lending and structural adjustment programs. Through these mechanisms, the Fund became more involved in the economies, including the trade dimension, of a great majority of independent developing countries.
Like the IMF, the International Bank for Reconstruction and Development, the World Bank, has been increasingly involved, in trade expansion and trade policy promotion. In the 1940s the focus of the Bank was long-run project financing in Europe, including the rebuilding of physical infrastructure on the war ravaged continent. After the reconstruction of Europe, the Bank turned from its almost exclusive project-lending role to policy intervention and technical assistance directed exclusively at the South. Since the 1970s and 80s, its activities have focussed on policy based lending and the implementation of a market-friendly, neo-liberal reform agenda.
Because trade expansion and trade liberalization are critical pillars of IMF and Bank structural adjustment programs, both of these institutions are increasingly playing important roles in the multilateral trading system.
I.3 The Process of Governance in the Contemporary MTS
The institutional framework of the multilateral trading system has adapted over time to the specific needs and requirements of the over-riding global integration process and the specific values and ideological shifts that accompany that process. As noted above, since the middle of the twentieth century that process has been primarily American driven but has the support and active intervention of a number of supporting casts including Britain, the EU and the collective persuasion of the G-7.
Governance within the context of the international trade system revolves around issues of:
– Agenda setting. Who sets the substantive context and outcome of negotiations? What (and whose) are the predominate values being upheld? Are (and how are) the participation, substantive and advocacy position of different groups of countries and civil society factored in and included in debates?
– Rulemaking. What is the basis for it? What are the formal and informal processes of negotiations and participation in the process? What are the procedures for ensuring fairness and accountability?
– Enforcement. What are the enforcement mechanisms and processes for weighing claims and counterclaims, arbitrating conflict and enforcing judgements? What are the procedures for ensuring fairness and accountability?
– Recognition and remedying structural and other imbalances. What is the nature and extent of structural and other imbalances in the system, as it evolves? What mechanism exists to assess these? How does the system respond and correct such imbalances?
From the perspective of governance, the GATT, which acted as an international trade organization over the last fifty years, did not have much authority but had a great deal of flexibility. The GATT arrangement was narrowly focused on the commercial aspects of countries’ foreign economic policy and manufacturing trade and thus remained a code of conduct and informal non-legal institution for overseeing trade negotiations. While the GATT regime was based on non-discrimination (most favoured nation–obligates trading nations to treat all their trading partners alike) and reciprocity, it did leave scope for bilateral arrangements and special privileges for developing countries. It also did not address the issues of private capital flows and investment which were covered under the unilateral and bilateral arrangements needs of individual countries.
Even within the GATT there was an ad hoc process of implementing and contracting to rules and particular arrangements. In fact many of its provisions were not enforceable and existed as codes of conduct. The dispute settlement process was simple and not binding, nor automatic; any party to the dispute could block it at all stages. Thus there was no finality to dispute. Within the GATT framework regionalism was frowned on and actively discouraged, though allowance was made for the formation of the European Coals and Steel Community which eventually became the European Economic Community and today the European Union. The argument made, especially by the US, was that regionalism would undermine multilateralism and was inherently bad for the world economy. However, the Cold War gave the exception to Europe in deference to an attempt to create the other NATO-the still-birthed North Atlantic Trade Organization.
From the 1940s to 1970s the US found free trade to be of great value to its economy. It held dominance of trade of goods. Its corporations ruled the world. By the late 1960s however, threats to U.S. dominance began to emerge: the rise of Japan (and later, the Asian tigers), the rise of Germany and a stronger Europe; and more militant developing countries–arguing for revision of the trade system–the call for New International Economic Order (N. I. E. O.).
The rise of the competitive threat from Japan and the NICs led the US to back slide into protectionism, now reformulated as “managed” trade or “strategic trade.” With cries of “unfair” trade, “level playing field”, the US temporarily abandoned principles of free trade and the GATT in favour of aggressive unilateralism. By the mid 1980s the US itself was looking to preferential trading arrangements, an idea that it had previously rejected on the grounds that it was bad for free trade and the multilateral trading system. Beleaguered by the so-called Japanese threat and with Europe now consolidating towards a single market, the US felt it was time to secure its own backyard. Hence it negotiated FTAs with Canada, and then the North American Free Trade Agreement (NAFTA).
Thus at different points in time protectionism has accompanied globalisation. During much of the prior globalisation waves and under British dominance, protectionism went hand in hand with global integration. Under the GATT system, while the emphasis was on multilateralism and free trade, there was a high degree of tolerance towards protection. This was evident in the growth history of the EU and the US, both of which utilised different degrees of protectionism to consolidate their growth process. While the US tended to favour measures of protection, the EU focused on government subsidisation and protection of particular areas of the economy. With the hemorrhage in the balance of payments of the US in the 1970s and 1980s, the US made a dramatic turn to protectionism with its ‘Super’ 301 trade provisions and along with Europe resorted to manage trade through such non-tariff devices as orderly marketing agreements (OMA) or so-called voluntary export restraint agreements. These practices evolved out of the experience of the long standing tradition established in the 1960s with the Long Term Agreement on Textile and Apparel which later became the Multifibre Agreement, which limited the amount of clothing and textiles that could be exported by developing countries into the developed countries.
In the late 1980s the structural shift of the US economy towards services and away from manufacturing became more pronounced. In addition the emergence of new technologies in information, communications and the like showed signs of promoting new areas of competitiveness for the economy. There was therefore a need to protect these new areas by bringing them under a multilateral framework. Protection was also sought in the formation of preferential trading arrangements, which, as noted above, the US secured first the Canadian market, then the Mexican market. These and other such arrangements along with the EU consolidation towards a single market help to contribute to a proliferation of regional trading and economic arrangements including the US’s quest for a Free Trade Area of the Americas (FTAA).
Globally, by the 1970s, however, certain inadequacies began to put severe pressure on the multilateral system. These were primarily in the areas of the proliferation of non-tariff barriers, the shift in the comparative advantage of the OECD countries from manufacturing to high technology and services; and the consequent rise of manufacturing capabilities in developing countries. Additionally, protection of the new competitive advantage of the North required a tighter, more regulated system to protect services and high technology from encroachment by the South. The GATT, therefore, needed to be expanded to these areas.
The eighth round of GATT negotiations, the Uruguay Round, is the umbrella which covers much of these activities. This round “substantially changed the domain of the 1947 GATT by including investment and services and intellectual property rights.” Thus the Uruguay Round Agreement (also know as the WTO Agreements) has three pillars: the updated multilateral trade agreements (GATT 1994); the GATS (General Agreement on Trade in Services); and TRIPS (Trade Related Intellectual Property Rights). The last two pillars are very important because they extended the multilateral trade agreements into areas never before considered, and thus also alter the legal structure of the agreement and commitments. While the GATS extended the multilateral trade agreements into the investment dimension, the TRIPS and some provisions within the GATS extended it into the areas of domestic regulatory standards as opposed to the traditional realm of foreign policy. The above extensions and modifications (GATT 1994, GATS, TRIPS) plus a Trade Policy Review Mechanism (TPRM), a set of (sectoral) plurilateral agreements in four sectors (Civil Aircraft, Government Procurement and Dairy and Bovine meat) which are applicable only to members who take on the obligations these entail, comprised the formal WTO Agreements. The Uruguay Round also created an expanded and greatly empowered dispute settlement mechanism to legitimate and make binding these extensions on all members.
At the end of the Uruguay Round negotiations, the Marrakech Declaration (1994) established the World Trade Organisation to oversee and implement the set of new trade agreements as well as to enforce the dispute settlement process regarding members’ rights and obligations.
The next sections will elaborate more on the details of the WTO and global trade with particular reference to how the characteristics and features outlined above impact the relationship between developing and developed country members of the WTO.
II. THE WTO AND GLOBAL TRADE: A SUMMARY ASSESSMENT
This chapter summarises the history and rationale of global trade liberalisation. It presents the theoretical arguments adopted by the major players in the trade negotiations process, with a view to revealing often unstated assumptions of their positions. This also provides a context within which the informal agreements governing trade relations, characterised in the General Agreement on Tariffs and Trade (GATT) and its now legally established successor, the World Trade Organisation, could be studied.
II.1 The General Agreement on Tariffs and Trade/World Trade Organisation
II.1.1 History of the GATT/WTO
Formalised in the throes of the globalisation process in 1995, the WTO represents an expansion of international economic relations and the legitimisation of the theory of comparative advantage . This new organisation, unlike its predecessor, has expanded power and jurisdiction, and has become “the most important vehicle for disseminating and implementing economic and social polices around the world.” The institution thus exerts a strong influence on the forces of globalisation, and confirms the strength of market forces in integrating all spheres of domestic economies.
The WTO agreements, unlike previous trading regimes, incorporates agreements on a wide range of issues binding on all countries, which are obligated to follow WTO rules by incorporating them into domestic policies and law. It thus recognises that the process of trade liberalisation is a political one, because it requires that internationally agreed rules on trade concessions be enforced through the state apparatus. The rules that govern the WTO therefore set out to ensure that once rules are acceded to, all parties are precluded from reversing or changing them in the future, outside the boundaries of the WTO process.
The WTO mandate is informed by the theoretical position that in the long run free trade leads to a more optimal global economic outcome, deriving from greater competition and productivity. Ostensibly, there is scope for benefit by all countries (including developing countries), from the rationalisation and redistribution of trade. Additionally, all members have access to a multilateral dispute settlement mechanism through which countervailing and compensatory sanctions can be imposed on violating states.
Further, it contains a non-compliance mechanism, which asserts that failure to implement agreed changes or reforms can lead to a country’s expulsion, and thereby the loss of access to participation in international trade. As such the WTO can be viewed as the linchpin of the globalisation process.
The WTO Agreements are contained in some twenty-nine individual legal texts, and sixty agreements that cover the commitments relating to goods, services, intellectual property, dispute settlement and trade policy reviews. The purpose of the agreements contained within the WTO is to facilitate producers and owners of capital to transact business in an environment that is free from unilateral action and prohibitive trade policies. Thus, once a country accedes to the WTO, it must automatically accept all the Uruguay Round accords, contained in the GATT 1994 agreement.
II.1.2 From GATT to the WTO
The WTO and the WTO Agreements have superseded the General Agreement on Tariffs and Trade, which governed the multilateral trading system since 1948. The UR agreements, which took seven and a half years to reach, are quite extensive. The new agreements now include understanding in six areas, including other duties and charges, state trading enterprises, balance of payment provision, custom union and free trade areas, waivers of obligations and modification, and tariff schedules. Other significant agreements are in the areas of goods, specifically, twelve agreements covering: agriculture (AOA), sanitary and phytosanitary measures (SPS); agreement on textile and clothing (ATC), technical barriers to trade (TBT), trade related investment measures (TRIMs), anti-dumping, customs valuations, pre-shipment inspection, rules of origin, import licensing, subsidies and safeguards. Market access commitments in financial services, basic telecommunications and maritime transport are under the General Agreement on Trade in Services (GATS) while information technology is under GATT 1994.
Market access is achieved by lowering restrictions (tariffs and non-tariff barriers) on imports, but is also impacted by SPS, TBTs and other non-trade concerns. The WTO has three broad objectives: 1) to promote the free flow of trade by establishing trade rules which are transparent and predictable; 2) to act as a forum for trade negotiations; and 3) to engage in and enforce a dispute settlement procedure. In order to accomplish these broad objectives the institution is involved in a variety of day to day activities including administering the WTO trade agreements, conducting on going negotiations, monitoring national trade policies, as well as providing technical assistance and training for developing countries. It also engages in co-operation on international economic policy decision making with other international organisations.
II.1.3 Operational Principles of the WTO
These agreements are underpinned by a set of principles, which are contained throughout the agreements and instruments of the WTO, and identify the rights and obligations of each member state. The four operational principles are:
1. Non-discrimination – Defined in Article 1, this principle binds all countries to grant similar treatment to products originating from any other country, and posits that all countries are equal. Also known as the most favoured-nation clause it prohibits a country from giving special concessions to a particular country or from discriminating against it. The non-discrimination principle runs throughout the WTO agreement and is regarded as core to the effective operation of the world economy. Although there are exemptions to this rule (under clearly defined parameters), the Articles of Agreement provide for the dispute settlement system or mechanism through which states infringed upon can seek redress.
2. Free Trade and Fair Competition – The WTO is committed to an international economic system of free trade, governed by rules designed to promote open and fair competition across all markets. Theoretically this implies a level playing field, to ensure that trade is undistorted and that all countries derive benefits from the process.
3. Market access – Through the standardisation of economic rules, the WTO sets out to establish a predictable system of world trade through which access to foreign markets is clearly guaranteed for producers and exporters. The intention is also to give consumers greater access to cheaper and better quality products. The focus in this regard is on the establishment of a set of protocols for tariffs and customs duties, which includes that they be non-discriminatory among imports. This then becomes a commitment of the member to the WTO and consequently cannot be adjusted without negotiations with its trading partners. Key to a country’s adherence to the principle of market access is the transparency of its domestic trade laws and regulations.
4. Development and reform – In addition to promoting worldwide economic growth, the WTO supports development and reform through a ‘balancing’ out of trade. Ostensibly this is targeted at developing countries and countries in transition; provisions are thus written in to assist these countries in trade policy issues, through technical assistance and training programmes. Although the pace of reform and implementation of agreements is flexible for some countries, all are bound to the same rules and policies.
Arising from these principles, participants in the global economy, governed by the WTO system of rules and agreements are expected to derive an array of benefits, all of which reinforce the supremacy of liberal open market policies. These include:
1. Collective dispute settlement – unlike the GATT system of dispute settlement, which effectively gave a veto to the infringing party to a dispute, the WTO retains jurisdiction under clear procedures and timeframes. Any perceived violations of trade rules must be lodged with the Dispute Settlement body and all parties are bound to the rules and findings reached.
2. Reduction in the costs of living – all countries are expected to benefit through the regulated international trading system which gives rise to the general improvement in the living standards of a country, as the competitiveness of producers increases, and imports of economical, quality goods expand.
3. Stimulation of global economic growth.
4. Higher net global incomes, and
5. Promotion of peace and good government.
The system of liberal trade is thus consolidated and entrenched by WTO rules through the establishment of binding international legal agreements that frame how local authorities are required to implement domestic trade legislation and manage their local economies. In keeping with this, the functions of the World Trade Organisation are:
– Administering and implementing trade agreements;
– Acting as a forum for multilateral trade negotiations;
– Resolution or settling of trade disputes;
– Monitoring and review of national trade policies;
– Co-operating with other international institutions involved in global economic policy making; and
– Assisting developing countries in trade policy issues, through technical assistance and training programmes.
II.1.4 Structure of the WTO
The WTO has one hundred and forty-one members that, in 1999, together accounted for some 90 per cent of world trade. Decisions are made by the entire membership on the basis of consensus, which is interpreted to mean no formal opposition by any Member present at the meeting to the proposal under discussion. Majority voting – again on the basis of one country, one vote – is also allowed where full consensus is not reached.
The WTO’s highest decision-making body is the Ministerial Conference, which meets every two years. The agenda for the Ministerial is determined through a process of ongoing negotiation which takes place essentially among countries represented in Geneva, but also at several informal sessions organised by individual countries around the world. The principal responsibility of this organ is decision making on all matters of multilateral trade. In keeping with the objectives of the meeting and the agreed programme of work, a draft proposal for a declaration is usually taken to each Ministerial Council for approval, once there is consensus.
Generally, proposals considered by the WTO are advanced by the more economically powerful countries of Europe and the North on an informal basis, and are negotiated with other participants away from the formal stage. Each country is entitled to submit a proposal to a particular body or working group in the WTO after which other delegates are free to comment. These proposals are then generally considered in small sessions outside the formal setting with a limited number of participants. Often these sessions are convened by the chairpersons of existing working groups, who then present brief reports to the larger group. It is on this basis that draft proposals and outlines of declarations are agreed.
The WTO General Council composed of representatives of all members, meets once monthly, reports to the Ministerial Council and is responsible for overseeing the administration of the Dispute Settlement Body (DSB) and the trade policy review mechanism (TPRM), under which all members’ trade polices are analysed and agreed. The DSB convenes to resolve any disagreement arising from the implementation of the terms of the Uruguay Round. Through a process of consultation, the DSB sets out to find a mutually agreeable solution, consistent with WTO principles, to the dispute between the members in a timely fashion. It has sole jurisdiction in this process and has clearly defined terms of reference.
The TPRM, which convenes as the Trade Policy Review Body (TPRB), works through ongoing surveillance of the domestic trade policies of all member countries. Thus, the objectives of the TPRM includes the regular monitoring of each country’s economic activity, to enable a multilateral assessment of the policies of participants in the world trading system. The TPRM analyses are informed by a policy statement submitted by the country under review and a detailed report compiled by the WTO Secretariat. Reviews are conducted on a regular basis, with the Quad countries being examined once every two years. The next sixteen countries in terms of their share of world trade are reviewed every four years, and the remaining countries every six. The TPRM also sets out to improve transparency of trade issues and to promote public and intergovernmental debate on praxis.
Under the General Council are several subsidiary bodies, including the Council for Trade in Goods, Council for Trade in Services, and the Intellectual Property (TRIPS) Council all of which report to the General Council. The Goods Council oversees the implementation and functioning of all agreements covering trade in goods, alongside other individual bodies that have their own overseeing role. Specific commitments, within the WTO agreements define the scope of the latter two Councils, which may also establish subsidiary bodies as necessary.
There are also several specialised committees and working groups which deal with individual agreements and other areas of work such as the environment, development, balance of payment restrictions, membership applications and regional agreements. Additionally, the four plurilateral agreements contained in the WTO, on civil aircraft, dairy products, bovine meat and government procurement, each establish their own management bodies which must report to the General Council on their deliberations.
II.1.5 WTO Provisions for Developing Countries
Of its one hundred and thirty-five members, three-quarters are classified as developing countries, representing ninety-eighty states located across Africa, the Caribbean and parts of Asia and the Pacific, with twenty-seven of this number being classified as least developed countries. Recognising their peculiar constraints and recalling its stated goal to promote sustainable development, the WTO agreements provide ‘special and differential’ treatment, under very specific circumstances, to these members. Among these special provisions are:
– Longer time periods for implementing agreements and commitments;
– Specific measures to increase trading opportunities for these countries;
– Provisions requiring all WTO members to safeguard the trade interests of developing countries;
– Support to help developing countries build their infrastructure for WTO work, including implementation, trade policies and dispute settlement; and
– Technical co-operation, the objective of which is to assist developing countries create or enhance capacity, both in terms of institutions and training for officials involved in the WTO process.
Developing countries whose economies are characterised by slow or negative economic growth, high unemployment, and unstable or declining prices for their raw and/or primary commodities are also provided for through the rules of the GATT/WTO. Part IV of the GATT for example includes a provision for non-reciprocal preferential treatment, which allows developed countries to make concessions at their discretion. This is supported by an enabling clause adopted in 1979, which gives differential and more favourable treatment to developing countries. Provisions for waivers exist, including those regarding preferential tariffs and treatment for Less Developed Countries, which allows developing countries to secure preferential tariff treatment on products.
A WTO committee on trade and development, whose work is to monitor and review the needs of developing countries, supports these provisions. Its specific responsibilities include monitoring, implementation, establishment of guidelines for technical assistance, and mechanisms for securing increased participation for developing countries in the trading system. Additionally, the WTO has conducted a High-Level Meeting on Integrated Initiatives for Least-Developed Countries. This meeting was held in October 1997, involving six intergovernmental agencies, and resulted in an “integrated framework” to assist countries to increase their ability to trade. This meeting prioritised the issues and needs of these countries and also promoted additional preferential market access arrangements to facilitate their increased exports.
II.1.6 Some Achievements of the WTO
The significance of the WTO is rooted in the range of economic activity it covers, ranging from the most basic to the most sophisticated, from trade in manufactured goods to international conventions governing intellectual property rights. Since its entry into force, the WTO has established a role for itself in trade facilitation through strengthening existing rules and agreements. It also seeks to bring together the discipline of other international organisations under its rules-based system, by acting as the coordinator of international efforts and thereby making them multilaterally binding. The WTO counts among its major achievements the continuing and invaluable work of its regular and special bodies and Ministerial Conferences, the continued growth in global trade and investment flows, an increase in membership and applications for accession, the entering into force of new protocols in finance, information technology and telecommunications, and moves towards greater transparency and inclusiveness.
To date the WTO has held three Ministerial Conferences at Singapore in December 1996, Geneva in May 1998, and the ill-fated Seattle meeting in November/December 1999. Each Conference set out to advance the gains of the Uruguay Round (UR) and to secure a more entrenched trading system.
The work of the Ministerial Conferences has focused primarily on the ‘in-built agenda’ of the UR to expand the range of issues administered by the global trading system.
The most ambitious of the previous rounds of trade talks, the UR resulted in the crafting of rules to govern services trade and to protect intellectual property. The Singapore and Geneva conferences took this process further, overseeing the establishment of working groups on trade and investment, trade and competition policy, and transparency in government procurement.
Additionally, if the commonly used indication of volume of world trade were to be used, the outcome of economic governance by the WTO would appear to have been successful. Consistent growth of 4 per cent in the volume of merchandise exports in 1998 and 1999 followed an impressive growth of near 11 per cent in 1997, almost four times faster than global output. The pace of growth is expected to increase in 2000 to 6.5 per cent, near double the expected growth in global output of 3.5 per cent. In respect of investment, the growth is even sharper with global foreign investment flows reaching US$800 billion in 1999, more than double its 1996 amount of US$340 billion. As recently as 1985 global FDI totalled $60 billion. According to the WTO, however, cross-border mergers and acquisitions, in contrast to greenfield investments, was the main factor behind this increase.
During 1997 the WTO secured the successful conclusion of negotiations on basic telecommunications services, and this entered into force on 5 February 1998 as the Fourth Protocol to the GATS. At that time sixty-nine governments agreed to wide-ranging liberalisation of the sector, with others committing to complete liberalisation over a period of three to four years. This represents a major advance in the globalisation process as the telecommunications sector represents one of the largest growing industries with domestic and international revenue amounting to US$600 billion.
On 1 March 1999, the WTO agreement on financial services entered into force as the Fifth Protocol to the GATS. Seventy governments committed at the time to a multilateral agreement to open their financial services sectors, covering more than 95 per cent of trade in banking, insurance, securities and financial information. The emphasis in the schedules of commitments is on the opening of markets and binding entry conditions for TNCs and the rules of national governments.
This translates to more foreign banks, securities firms and insurance companies being allowed to operate and conduct across borders in many more countries, although various conditions may be attached and numbers can be limited. Companies can set up in one country supplying services to customers in another. The protocol therefore expands the range of possibilities and provides greater opportunities for countries either already present in overseas markets or in a position to offer such services.
While the benefits for the TNCs and the economies of the capital rich developed countries in terms of high returns on investment are obvious, it has been claimed that developing countries can benefit from inflows of capital and financial expertise brought in by foreign investors. Additionally as foreign investment is attracted to their markets, these countries are expected to experience growth.
Another significant development for the WTO has been the expansion of the number of participants in its negotiations and membership. In 1947 at the formalisation of the GATT agreement twenty-three countries participated in the round. Until 1964, GATT participation was characterised by fluctuations as countries withheld involvement and others withdrew entirely from negotiations. At the end of Kennedy Round in 1967 there were sixty-two members of the GATT.
This number steadily increased, resulting in an unprecedented 102 and 123 participants at the Tokyo Round and the Uruguay Round, respectively. Currently, the WTO boasts an aforementioned membership of 141 countries.
In July 1996, the General Council of the WTO adopted specific guidelines on relations with NGOs, declaring that mechanisms should be established to ensure the more intimate participation of civil society in global trade processes and to create a better informed international public on matters related to the WTO. Importantly, the WTO has included the private sector and NGOs in two symposia, the first in November 1997 on competition policy and subsequently in March 1998 on trade facilitation, at which representatives were given the space to make contributions on their specific areas of interest. These arrangements are discussed in more detail in Chapter III.
II.2 Trade Liberalisation, Growth and Development
Developing countries, particularly LDCs, find themselves, after many years of involvement with the world trade systems, primarily the exporters of raw material and primary commodities still suffering from unstable or declining prices and unfavourable terms of trade for their goods. This has, in part, contributed to an external debt crisis, which has left their economies extremely fragile and dependent, with serious retrogression in human and social development as well as severely impaired physical infrastructure. They have also been subjected to IMF and World Bank structural adjustment programmes.
Structural Adjustment Programmes (SAPs) were designed to wholly re-orient developing countries to the global market and pave the way to global trade liberalisation. Thus many developing countries’ exposure to the process of trade liberalisation predates the existence of the WTO. However, these liberalisation measures were not taken account of in the UR negotiation and these countries were required to make further concessions. Thus the capacity of developing countries, in particular LDCs, to further implement another complex array of trade liberalisation rules has been severely stretched and is non-existent in many cases.
In sum it is fair to say that development has been increasingly shunted to the back burner of the trade liberalisation agenda or worse, it has been subsumed under trade and financial (debt management) rules that in fact are working against development. This is so for seven reasons:
First, trade rules are to create a level playing field between unequal partners. And the level of built in symmetries and inequities in the WTO agreement and the subsequent use of the Dispute Resolution process and trade policy review is more likely to focus on the negative synergies between trade liberalisation and development.
Second, the North, especially the US has persistently refuse to offer substantive (as opposed to lip-service) support to the development concerns of the South
Third, the present governance process in the WTO makes it likely that over two-thirds of the developing countries members will not be able to shift the agenda from trade to development.
Fourth, the myth of the automatic link between trade liberalisation and growth is increasingly being exposed. Trade liberalisation, per se does not automatically bring growth.
The mantra of the WTO is that ‘we are committed to trade liberalisation which is positive for and essential to growth and development’. However, the analytical links between trade, growth and development have not been clearly shown. Furthermore, the empirically available evidence does not demonstrate that trade liberalisation has indeed benefited development. Arguing that ‘(t)he empirical evidence has been at odds with the promises (of trade liberalisation)’, UNCTAD Trade and Development Report 1999 provides evidence that rapid trade liberalisation led to trade deficits in the South as exports stayed flat or did not keep pace with rising imports. Thus the average trade deficit of the South is higher by three per cent more than the 1970s and the average growth rate is lower by two per cent (p. vi). Thus there is no automatic link from trade to growth or development. As noted by many researchers include the aforementioned UNCTAD report, Joekes (1999) and Rodrik (1999 and 2000), there are two sides to liberalisation: the elimination of restrictions on imports and increased exports. However, rapid liberalisation of imports does not mean growth because while a country can control how fast it liberalises its imports, it cannot determine how fast its exports will grow.
Growth of export is a function of at least three factors:
1) price of existing imports (of intermediary goods etc.);
2) supply side factors such as state and availability of infrastructure, human, business capacity for new exports; and
3) market access, which is constrained by high tariffs and non tariff barriers in the north. Thus overall trade liberalisation may simply result in increased imports which in the context of a 34 per cent decline in the price of non-oil commodities (declining terms of trade) may increase the trade deficit exerting pressure the balance of payment. Ultimately, this will worsen external debt further constraining growth. Thus unbridled trade liberalisation is not wise. Other factors must be considered: these include timing, sequencing and scope of trade liberalisation, strengthening local enterprises, building human capital, technology, and building export capacity. Countries should also have the ability to make strategic choices in terms of finance and investment (Rodrik 2000, Khor 2000, and Ragahavan 2000).
Nordstrom (1999) in a study on the relation between trade and poverty, commissioned by the WTO, found that there is no ‘tendency of catch up convergence’ of income; rather incomes tend to be diverging within each segment of global income. Whenever convergence tendency was observed, this was among lower income countries and reflected the relative better off among the poor countries slipping backward (downward convergence). Rodriguez and Rodrik (1999) argue that trade outcomes approaches based on automatic trade growth linkage suffers from conceptual and empirical shortcomings, including the endogeneity of outcomes, the failure to specify the mechanisms through which exports and imports affect growth and measurement problems.
The absence of clear evidence of the growth promoting potential of rapid trade liberalisation raises serious questions for development. For, if, as the IMF asserts, ‘development and trade agendas have become increasingly intertwined (such that) trade reform, broadly conceived, goes far beyond reduction of border restrictions and plays a critical role in supporting growth and poverty reduction”(2000), the evidential lack of growth does not portent well for poverty eradication. To compound the problem the cost of implementing the agreements which is conservatively estimated at about $10 million per country, specifically for custom valuation, intellectual property and the Agreement on Agriculture (Stiglitz 1999) is likely to overwhelm not only the development budget but may severely impinge on the social budget. Both development, especially human and sustainable development, and poverty eradication are fundamental to the social and economic advancement of women.
Fifth, there is also mutually reinforcing links between the Structural Adjustment Programs of the IMF and the World Bank and the trade liberalisation agenda of the WTO. The programs of these institutions, however differently packaged and named (i.e. poverty eradication and the Poverty Reduction Strategy Paper (PRSP) mechanism), are predicated on a market and trade liberalisation model. They do not pay attention to the institutional processes and differences in the South as opposed to those in the North. Thus the combined efforts of these agencies lead towards the integration of trade and development (‘mainstreaming’ development is meant to occur via the Integrated Framework for Technical Assistance. But there is very little development and it does not even show in the name of the initiative. (See below for more on WTO concept of technical assistance).
Sixth, in such an environment the relevant comparative advantages of developing countries would seem to lie in cheap labour; increasingly that cheap labour is female labour which is systematically underpaid and, if maintained, is likely to trap both the women workers and the countries which depend on this low-wage growth strategy in a perpetual swirl of debt and dependency.
Seventh, like structural adjustment programs (of which trade liberalisation is an essential feature), implementation of the UR agreements have important implications for women’s and men’s possibilities of enjoying their social and economic rights as well as the right to development of Southern Countries.
II.3 Trade Liberalisation and Gender
Item seven provides a natural segue into another burning issue in the trade liberalisation debate: the issue of the links between gender and trade and the implications for the objective of gender equality to which member countries of the WTO made commitment in the Beijing Platform of Action.
How are trade and trade liberalisation linked to gender and development?
It is unquestioned that there has been a serious blind spot in the development policies and programmes of many African, Asian, Latin American, Caribbean and Pacific countries-gender blindness. This so-called gender blindness has prevented policy makers from developing gender-sensitive policies in agriculture, rural development and food security that would have useful multiplier effects and foster sustainable growth and development. Development policy-makers either treat women as passive members of households headed by men to whom growth and development benefits are assumed to trickle down; or exploit women’s labour as foreign exchange earners either in export processing zones or in sex tourism. Thus it is also assumed that trade liberalisation will have the same effect on men and women, or that it is entirely beneficial to women.
However, the operations and governance of the multilateral and regional trade system have significant gender dimensions. One dimension is the issue of the role that gender plays in setting trade rules, the kinds of assumptions that these rules are based upon and the consequent false premise and mis-diagnosis of development and social issues that follows. It also includes the issue of who decides and who is consulted in the decision-making process surrounding WTO provisions as well as provision at the regional level. A second gender dimension focuses on the two-way interplay between existing gender inequalities and trade policies designed to facilitate export promotion and trade liberalisation. In the first case, given the relative lack of attention to the role of unpaid labour in the economy, trade policies have serious implications for women’s welfare. This is likely to be the case if policies simply focus on the employment creating aspects of liberalisation policies without putting in place mechanisms to support social reproduction. Furthermore, decreased tax revenue from the liberalisation of imports and the custom valuation agreements of the WTO will lead to increasing fiscal deficits (Stiglitz 1999). As the experience from structural adjustment programmes have shown, the likely targets of the spending adjustments are social programmes which chiefly benefit women.
Secondly, it is assumed that trade liberalisation creates employment which is unambiguously good for women. However, there are issues about the health implications of such jobs, and the long term income and livelihood sustainability of the women workers in the export sectors (World Bank 1995 and Joekes 1999). The employment of women is predicated on societal bias that shunt women into low paying or zero-benefit jobs. Furthermore, the trade liberalisation process has been associated with the casualisation of labour thus reinforcing the tendency to pay low wages both in agriculture and manufacturing. This phenomenon has implications for the country terms of trade both in agriculture and manufacturing (Wood 1991 and Lim 1999).
Thirdly, trade rules which focus on export promotion by altering domestic regulations and forcing factor re-allocation may also affect women’s access and control over resources such as land, credit and technical assistance. A case in point is the shift from food to cash crop production which puts pressure on the transformation of the use of land towards the cash crop sectors and away from women’s traditional domain (Bifani 1999, Joekes 1999).
Fourthly, it is assumed that trade rules and policies have their primary impact only at the level of the formal economy, hence not much attention is paid to how the implementation of trade rules impact the informal economy. However, the expansion of export production, in particular, in manufacturing, has been associated with expansion of informal sector activities and homeworking, drawing directly on women’s labour (Bifani 1999, ILO 1996, Joekes 1999).
Fifthly, there is the all too dark side of trade expansion for developing countries, that it has been driven by import growth with threats to the livelihood of some women and loss of traditional market domain such as vegetable and food production, marketing and distribution (Olivire 1997 and Williams 1998).
Gender is clearly an important variable in the multilateral trading system. Regional arrangements such as NAFTA tend to impose stricter versions of the wider MTS rules and have greater coverage in, for example, the area of environment and their impact on domestic regulation. They too have pronounced strong impacts on women in terms of employment, income, access and control of economic resources and overall welfare. It must be noted that some regional arrangements have recognised the gender impacts of trade and development activities and have created gender specific provisions which even if they are not fully operationalized or carry the same weight as the rest of the agreements are a step in the right direction. For example, the EU gender resolution 1995 (EU Council of Development Ministers) obligates EU development co-operation policies and programs to encourage and support changes in attitudes, structure and mechanisms at every level in order to reduce gender inequality. The Gender resolution is supposed to underlie the ACP-EC partnership agreement. SADC also has some formal recognition of gender within its policies and programmes, and there is ongoing attempt to introduce gender analysis and perspective in the FTAA negotiations. At the global level many UN Agencies such as FAO, UNCTAD, UNIFEM and the ILO have been paying increasing attention to gender and trade. However, as can be see these are very few and are at a very nascent stages. Considerable research still needs to be undertaken in the area of gender implications of the multilateral and regional trading system including evaluation of specific WTO agreements.
II.4 Post Seattle: Status of Debate
Despite the apparent measures of inclusion and special considerations, developing countries have numerous complaints with the WTO system. Some of these are systemic issues relating to governance (these were discussed above). Some issues related to specific examples of unequal treatment and imbalance built into the agreements. Other issues have to do with the reality of implementation of the provisions of the agreement and unequal sharing of the burden of adjustment. And, lastly there is the issue of lack or realisation of anticipated benefits from commitments made by the developed countries.
Many developing countries participated in the WTO system with the expectations and the belief in the promises made with regard to three or four broad areas that would specifically benefit them: 1) reform of agricultural trade, 2) reform of textile and clothing trade, 3) reduction in industrial tariffs; and 4) the expansion of market access. Underlying the specific concerns in these areas was a focus on the expansion of market access which would facilitate the export led growth model that they had been persuaded to undertake via structural adjustment programs or other reform strategies or autonomously undertaken on their own consideration of the growth path and trajectories of the national economy. For this they traded-off their reservations on such restrictive agreements as the TRIPS, TRIMs and concerns over the liberalisation of services (GATS). Other developing countries who were into exporting manufactured goods such as steel were concerned with the intention of phasing out bilateral trade restricting arrangements such as voluntary export restraint agreement (VERs or VRAs) and orderly marketing agreement (OMA) in these areas.
What many developing countries negotiators apparently did not consider in their narrow focus on market access instead of a broader sustainable development agenda was the comprehensive scope of the rest of the agreements, the cost and sacrifice it would entail in terms of supply side factors like human resources, capital, change in domestic legislation and impact on the already poorly functioning institutional structure.
This is further complicated by the practice of non-compliance or technical but not substantive compliance by the North in critical areas of tariff reduction, liberalisation of agriculture and phase out of the textile agreement.
Within the framework of the WTO there are mandated reviews of most all provisions. Ostensibly, this should provide for a process of stocktaking and assessment of the pace and impact of implementation. However, a difference of opinion emerged with the WTO about the exact nature of the review process to be engaged in: is it a simple technical review of ability to implement the agreement (the Quad, particular, the US position)? Or, is it a substantive review of the social, economic and development impacts of the agreements (the developing countries, with some exceptions)? This tug of war over the review process was further complicated by the insistence of the developed countries for accelerated liberalisation across all sectors and the inclusion of new issues such as investment, competition policy and government procurement, which under the Singapore compromise had been left at working group level or, as in the case of labour standards, had been unequivocally stated to be outside the scope of the WTO and a matter for the ILO. These matters played substantive role in the failure to achieve a Ministerial Declaration in Seattle and the subsequent collapse of the third ministerial.
Though the talks failed there are still the issues of the built-in agenda items such as review of the AOA and TRIPS and TRIMs, the mandate for continuing negotiations in services and the expiration of the implementation time (January 2000) for many developing countries to be compliant with TRIPs etc. Thus though the issues that led to the break down in Seattle were not resolved talks have resumed early in 2000 and most delegations are heavily involved in multi-faceted and exhausting range of negotiations. The next section presents a brief overview of the state of play at the WTO on these issues.
Immediately after the debacle in Seattle there was much talk about confidence building, democracy, transparency by WTO officials and members of the Quad countries (the US, the EU, Japan and Canada), the major decision-makers in that institution. The issue of ‘development’ seemed to move centre stage in the public agenda of the WTO. But contrary to this public face, matters have not progressed much. In the seventeen months since Seattle there have been a number of meetings and discussions on the so-called built-in agenda items. However, for the most part, despite some agreements on procedures and guidelines for negotiations, in critical areas such as agriculture and services there is a logjam with many proponents going back to their pre-Seattle positions. The developing countries’ concerns about development and implementation issues are being sidelined and the push for a new round of broad and deep trade liberalisation dominates the agenda.
The debate is thus drawn. The developing countries want to see their issues around implementation, internal transparency and the imbalances and inequities in the agreements addressed before moving on to further liberalisation. The developed countries argue that some of the immediate concerns of the developing countries can be addressed, in the first instance, by technical assistance; but that any other changes developing countries seek will result in a shifting of rights and obligations. Therefore, they argue, the only way to ensure balance is that other commitments must be traded-off and that can only be achieved in the context of broad new round, a single undertaking.
II.4.1 The Agreement on Agriculture
Agriculture is of tremendous importance to the developing countries including many Caribbean nations. As a result, any slight variation in food supply and prices can have tremendous negative impact on the day-to-day lives of millions of people. Agriculture is also very big business in the EU and the US though only about five to ten per cent of population in the North farms. Thus the AOA has been a big source of contention within the WTO in the run up to Seattle and post Seattle.
Though the negotiations broke down in Seattle an agriculture review is a critical part of the WTO work program as Article 20 (AOA) mandates a review of agricultural negotiation and continued process of reform in terms of market access, domestic support and export subsidies.
In general the AOA list products covered in the commitment schedules of countries and there is a 14 HS code (fishers and fish products are excluded). The 14 HS code covers wheat, wheat flour, coarse grain (barley, corn, sorghum, oats, millet, rye and mixed grain), rice, sugar, skim milk powder, butter/buttermilk, cheese, whole milk powered, bovine meat, pigmeat, poultry meat, oil seed, fruit and vegetables and other agricultural products. A major problem with assessing the implementation of AOA has to with data problems in terms of tariff line, product specification, comparability of data assembled on a common basis. Export subsidies are to be reduced as part of the commitment and domestic support, calculated as an aggregate measure of support (AMS) over the six-year implementation period by a specific percent.
As reported in SUNS and Bridges, the South would like to see removal of nontariff barriers on agriculture and its replacement with tarrification and progressive liberalisation in this area. They also want flexibility to subsidise farmers. Currently the reality for the South is that they are being inundated with cheap heavily subsidised agricultural imports from the north; net food importers face higher prices in food bills and food security. But the stickiest point of all is the slow pace of implementation by the North of their obligations to liberalise their agricultural sectors.
The South would like to see flexibility in implementing their obligations on the ground of national food security, rural livelihood protection and poverty alleviation. It is also argued that food produced for domestic consumption and by small farmers should be exempted under the AOA discipline on domestic subsidy and domestic support.
Currently, the North agriculture is protected by so called blue and green boxes and though the North is decreasing domestic subsidy there are entire areas of support under export credit agreement that are not subject to AOA discipline. This has been a bone of contention between the EU and the US.
The South also argues for ‘real, robust and operational special and differential treatment provisions in AOA’. They are especially concerned with issues of food security and multi-functionality of agriculture. They advocate that food staples should be exempted from liberalisation. And that within the current framework it is the North that is benefiting from S&D in terms of green and blue boxes. In turn they argue for the creation of development box which would be exempt from WTO discipline measures and polices aimed at enhancing food security and production capacity, sustaining employment for rural persons, regulating cheap import and stopping the dumping of cheap subsidised import to the developing countries.
The US, backed by the CAIRNS group, seeks to eliminate blue box but would like to maintain export credit, which has become a most controversial topic in the agricultural liberalisation discussions. The EU seeks coverage of all forms of export support including export credit guarantee. Thus the Seattle compromise (between the US and the EU) is off the table and the export subsidy debate is back to square one-the pre-Seattle positions of all parties. The CAIRNS group (G/AG/NG/W/11) includes S&D provision to export subsidy commitment and longer implementation framework as well as extension of S&D under AOA article 9.4 until the elimination and prohibition of export subsidy are completed.
Post Seattle there has been some attempts to continue the negotiations on AOA. According to Bridges and SUNS, a March meeting outlined the areas and the WTO Secretariat was requested to provide background papers on agriculture . A second meeting was held in June and a third slated for end September; there may also be meeting in October and a final meeting in November. Output from these meetings is expected to provide the substance for negotiations in a Special Session of the General Council in March 2001 with the possibility of an extra meeting in January 2001. There has been no date set for conclusion of the talks though some members are proposing target dates of 2003 based on the recognition that not much will be forthcoming until after the French election of 2002. But the first phase of the negotiation has so far focused only on the technical work.
Current issues on the agenda in addition to the pre-Seattle issues are the focus on use of food aid by WTO Members. The EU, in particular has argued that while export subsidy is declining other forms of trade distorting export programmes are increasing. These include export credits and the use of state trading enterprises (also a pre-Seattle issue). The EU would like to see all forms of support to exports of agriculture and food products treated on a common footing. They are willing to trade these off for decreases in export subsidy.
The problem with food aid from the point of view of the EU is that that it clouds WTO rules on transparency and export subsidies. Therefore, there needs to be WTO rules on transparency of food aid practices and discipline. Food should only be given as grants. Food aid should not be used as market promotion tool. The EU and Canada are both critical of US food aid and export credit practices. The EU wants discipline on all forms of exports subsidies including export credit, food aid and state trading enterprises (STEs). It claims they distort trade. The EU further argues that there is unequal treatment of different support mechanisms under present WTO rules and disciplines since WTO only currently covers export subsidies which are capped in WTO-AOA with annual decreases in commitment throughout the implementation period.
The issue of food security has also figured more prominently in the post Seattle debate. Food security used to mean ‘avoiding hunger’ but today it has taken on many dimensions. It also means different thing to different people and weighs heavily on the agricultural negotiations. There is also increasing attention paid to the role of TNCs in food and agriculture.
From the point of view of the North, particularly the US, food security is about the availability of food, accessibility of food and stability of food supply and food safety and preference. Thus, in particular, the US has not been overly supportive of calls for a food security box. The US reticence in this regard is best explained by a former Secretary of agriculture: “(The) idea that developing countries should feed themselves is an anachronism from a bygone era. They could better ensure their food security by relying on US agricultural products, which are available, in most cases at much lower cost.” It should be noted that there are strong differences among the Europeans, who generally have a broader and deeper view on this issue than the U.S. However, some countries such as Norway and Sweden have very strong support for national food security.
From the point-of-view of developing countries, food security is a much broader issue involving the question of self-sufficiency and national security. Agriculture is a special sector for which there have been unequal rules in the AOA. A study by ESCAP shows that the EU final binding for year 2000 is almost 2/3 above the actual tariff equivalent for 1989-93. For the US it is three-quarters higher. In general for major agricultural producers northern tariffs are about two times as high as those of the South. The US has also tripled its farm budget from 8 to 29 billion (1997 to present).
Though dumping is not allowed in the GATT, export subsidy is legal for agriculture and subsidisation takes place via export subsidy and indirectly via domestic support. Yet few developing countries can provide export subsidy and domestic support. Even then they are not allowed to increase their negligible level of export subsidy while the North is allowed to maintain 64 per cent of their subsidy (SUNS July 31,00).
Multi-functionality. Typically, conventional solutions to food security focus on the market: further concentration of TNCs, or multi-functionality (de-centralising network system of family farmers or co-operatives and non-trade concerns). Multi-functionality has to do with the multiple role of agriculture: production, rural, environment, social, global bio safety. So it is critical for public policy as well as serving the market. The notion of multi-functionality of Agriculture (MFA) is supported by the EU, OECD, Japan and Asian and opposed by CAIRNS and US. However there is some difference between the South view of the multiple nature of agriculture and the EU.
For the South, there is a specific condition of underdevelopment of which agriculture plays an important role. In many places it contributes 60-70 per cent of economic activity but for the North it is only 3-4 per cent. AOA has consolidated the privileges of the North so the conditions of the South are not the same as EU, Japan and Norway. The South needs S&D and policy flexibility in order to increase domestic capacity in the production of food.
Market access in agriculture. Market access in agriculture can be furthered by:
a. the elimination of distorting subsidies
b. real and substantive improvement in market access
c. convert non-tariff barriers into tariffs
d. minimum access with tariff quota
e. comprehensive binding
f. decrease tariffs
g. elimination of tariff escalation
II.4.2 The General Agreement on Trade in Services (GATS)
Services such as banking, finance, accounting, and tourism related areas such as travel services, entertainment, telecommunications and many other services are a growing part of Caribbean economies. According to the World Development Report 1999-2000, services accounts for over 60 per cent of world-wide value added as a percent of Gross Domestic Product (GDP). It is 68 per cent value added for high-income countries and 38 per cent for low-income countries (cited in Crosby et al). Services are also a growing part of international trade but until 1994 it was not a part of the multilateral trade agreement (the GATT). However, with the Uruguay round, trade in services was brought under multilateral discipline (under the General Agreement on Trade in Services, GATS) as well as being slated for future liberalisation through mandates on going negotiations to be undertaken in 2000 (the so-called GATS 2000).
The GATS framework is all-inclusive and has a built-in agenda for future negotiation which potentially could mean the liberalisation of all sectors of the service economy. The GATS is of tremendous importance to Caribbean economies but is an area of increasing complexity and much less understood by trade negotiators and civil society alike.
All of the WTO agreements have strong development, sovereignty and democratic implications and impacts but the GATS seem to hold much more potential to adversely impact future development paths because of its inclusiveness, its potential impact on domestic regulation, and possible implications for community-based and NGO service provisions. Many of the commitments are bound so they cannot be reversed in the future without exposing the country to tremendous cost from retaliation by Members. It is generally noted that these countries can take limitations and there are safeguards in the agreement but there are two areas of caution. First, as noted by Sinclair (2000), the effectiveness of the limitations depends on how thorough trade negotiators were in protecting potentially inconsistent measures; secondly, there are potential overlapping commitments due to problems in classifying sectors; and thirdly, even where a country has not taken a commitment on particular sectors there can be potential challenges and disputes as ‘even unscheduled sectors… are subjected to MFN and other horizontal provisions’.
Overall, the major challenge with GATS is the ‘untested nature of the provision, the lack of clear definition and thus countries are making commitments for which they are not sure of the full scope of its applicability and the limitations’. Furthermore, in some areas government can have unbound commitments so when developing countries think that they are trading off one set of commitments for another they may find that in the future trading partners have adopted new and inconsistent measures. Thus it is very critical what governments inscribed in their schedules. Given the lack of data on Caribbean economies it is hard to imagine that trade negotiators have a handle on classifying subsectors and detailing all of the measures that now exist and which they would like to lock in and all of the limitations they might want to take across all sectors. These are problems that are boggling the mind and exhausting the resources of developed countries such as Canada and the US who are way ahead in their data gathering, classifications system and have sophisticated input-output models of their economies. GATS commitment do not just apply to the central government but to all levels of governments – local, parishes (provinces) and even to non-government organisations and community-based organisations ‘acting on the basis of authority delegated to them by the state.’ Dispute settlement rulings have indicated that ‘exemptions, exclusions and exceptions to the GATS will be interpreted narrowly (Sinclair 2000). Hence it is not enough to list a sector positively. A country must also list the inconsistent measures it has affecting those sectors (negative list) if it wants to maintain those protection or it will lose them. “The disputes to date make clear that any errors and omissions will be costly for the defending government’ (Sinclair 2000).
Lastly, GATS have had tremendous negative impact on the Caribbean (the EC Banana case) already and pose further challenges especially in the area of culture/heritage and tourism (see the Canadian Magazine case ).
Current negotiations which are expected to be completed in three years are picking up pace with attention being paid to the issue of developing disciplines on safeguards, subsidies, government procurement and domestic regulation. It is also hoped to expand market access by including more sectors and eliminating restrictions on sectors already committed to in country schedules.
However, negotiations are plagued by a number of problems ranging from the usual North-South issues of assessment, imbalances and lack of mutual benefits to technical/political issues of what sectors are covered under subsidies, the scope and legitimacy of government regulations and definitional and data problems of services.
Services and the Nature and Scope of GATS
The GATS covers ‘any service except those services supplied in the exercise of government authority’ (Article 1). But Article 1:3(c) clarifies ‘governmental authority’ as ‘any service which is supplied neither on a commercial basis nor in competition with one or more service supplier.’ Thus pretty much all services with the exception of the military (and according to the WTO, central banking, social security and ‘the provision of service of trade negotiators) (my emphasis) are subject to challenges. Trade in services refers to the supply of services by any of four methods or modes of service delivery (Meyer et al). There are four modes of service deliver: cross border-from one country to another (mode 1); consumption abroad-tourism, studying abroad etc (mode 2); establishment or commercial presence (mode 3); and natural persons-temporary (not yet defined) entry of persons (management, technicians or consultants) to provide a service (mode 4).
In simple terms, the GATS focuses on rules on how countries treat foreign service providers and seeks to eliminate ‘all measures affecting trade in services (including government laws, policy and regulatory and administrative rules such as grants, subsidies, licensing standards and qualifications, limitation on market access, food safety rules, economic needs texts and local content provision, nationality requirements, residency requirements, technology transfer requirement, restriction on ownership of property or land; and tax measures which affect the foreign provision of services.
GATS is a framework agreement that provides for ‘progressively higher level of liberalisation of all services’. Currently, government procurement is exempted from some GATS provisions (Article XIII) but it also is part of the built-in agenda for future negotiations.
The GATS Architecture
The GATS Architecture is constructed around the following core elements:
MFN
Transparency: currently means government must publish their schedule of sectoral commitments. But the US wants them to identify domestic regulations that may be trade restricting.
National Treatment: must give foreign supplier treatment that is equal to the best treatment provided to domestic services and services supplier. This only applies to sectors of commitments.
Market access: prohibits numerical limits on services or services providers even if the regulation applies to both national and foreign suppliers (i.e. there is non-discrimination). Technically, it also applies to sectors for which governments have taken commitments.
Built-in commitment to continuous liberalisation through periodic negotiations starting with GATS 2000.
Bottom up approach to negotiation. This covers only those measures and sectors that are specifically identified in a country schedules-mainly the most restrictive measures such as national treatment and market access provisions-these apply only to sectors positively listed by the government; 2) governments can list (at the time of signing) exceptions and limitations on coverage in these sectors as well as in sectors in which they have made commitments; in some sectors commitments can be ‘unbound’ (within these sectors or sub sectors government could adopt new, otherwise GATS-inconsistent, measures in the future. “Every WTO Member is part of GATS but not all GATS rules are universal. Countries can chose which sectors to includes in GATS.
Top down (all measures and sectors are covered unless they are explicitly excluded) 1)-no measure is excluded a priori; note: ‘once a government lists a sector in its country schedule, it must list or lose all non-conforming measures’ (Sinclair); 2) certain GATS rules apply to all service sectors– even those where members governments have made no specific commitments in their country schedules-so-called horizontal rules (such as MFN and transparency); and 3) GATS rules apply to all mode of supply or consuming a service internationally,” Sinclair 2000.
Positive List: A country prepares a positive list of services sectors in which it undertakes obligations to liberalise (the current model and one the South supports). In the negotiations, discussions on guidelines and modalities some OECD countries are tending to favour a negative List approach which would subject countries to liberalisation in all sectors, except for those sectors it would put in its ‘negative’ list of exclusion.
GATS 2000 Negotiations (Key issues and what is at stake)
The major tensions in the negotiations on services revolve around a number of critical issues. During the UR the South was not as intensively involved in the services negotiations as the North. However, many southern governments are becoming more aware of the development and governance challenges posed by the GATS. Thus far the debate is dominated by the Quad. The major issue from the point of view of the North is progressively higher liberalisation by securing more commitments on possibly all service sectors. But within this there are some more focused objectives around changing the architecture of the GAT towards one that is more supportive of rapid liberalisation and which is more all encompassing than the present framework. This means that the North, in particular the US, is interested in the following:
Technical assessment of the implementation of the GATS, meaning examining the preparedness of countries to fulfil their obligations.
Greater emphasis and possibly a shift toward the negative list model which would subject countries to liberalisation in all sectors, except for those sectors it would put in its ‘negative list’ of exclusions. In this context there is also a push for ‘closed list’.
Transparency: the U.S. seeks a priori transparency.
Domestic regulations. This is the area of the most tension between the EU and the US and the Quad as a whole and the South. This related directly to government regulation that would be directly or indirectly impacted. Its authority lies in Article 6 of the GATS which restricts change ‘any more than is necessary to ensure the quality of service being provided.’ Domestic Regulation (Art 6) is GATS Pandora’s box (Sinclair 2000). It poses two tests for domestic regulations which could have far reaching impact on governments authority and which to many people provides for closing any loopholes left by the MFN, national treatment and market access provisions. The two tests are the necessity test (not more trade restricting than necessary) and the legitimacy test (to achieve legitimate interest). These two are very vague and the subject of much discussion. Since the issue of what is necessary and what is legitimate is quite subjective and may differ from member to member there is quite a lot of room for disputes.
Typical examples of possible legitimate objectives: protection of consumers, quality of service, competence of suppliers and integrity of the market. However, there are disagreements among trade negotiators as to the scope of coverage for these.
At this point, the US is being very cautious on the ‘necessity test as it does not want to constrain US regulators too much. (It is more aggressive on issue of transparency). However, the EU and other OECD members are quite obsessed by this to the point that the OECD would like to link necessity test linked to SPS and TBT. The EU would also want to strengthen links between the necessity and legitimacy tests. It sees the latter as the basis for the former.
Clustering. The US would like to see the use of clustering of services and sub sectors as the tool for negotiations.
Subsidies. There is a big question of what is a subsidy in the context of services and the GATS. From the point of view of the US, in the context of the GATS, a subsidy confers a commercial benefit or advantage above and beyond what would normally be there. While in the GATT 1994 two conditions are necessary for a subsidy to exist: 1) commercial and 2) specific advantage. This issue of commercial interest is very central since it can determine to some extent whether social services are covered or not in domestic regulation and subsidy. Critical to this is who receives the benefit the supplier or the citizens (consumer). It should be noted that under national treatment you can protect the right of national subsidies the US. does that for parks, national endowment of the arts etc. But the EU is also raising questions about this.
Overall, the South makes the same arguments as with other WTO provisions: lack of mutual benefits and one-sided concessions (this is especially so in the area of services given the limited supply capacity of the south). With regards to GATS the South has the additional complaint of imbalance in the treatment between capital and labour as the North has not made much commitments in the movement of natural persons (mode 4) whereas the entire agreement is biased towards the movement of capital (article XI and XVI South wary.
Caribbean nations have a lot to be concerned about in terms of service negotiation, tourism, cross-border provision of health and life insurance (via the internet etc.) and movement of natural persons.
In generally when it comes to GATS the Caribbean, as with other nations of the South, are concerned with the issues of safeguards, natural persons, and assessment (it should be much broader than the technical approach advocated by the North and should look at development and quality of life impacts); clearer rules before going into further negotiation especially the issue of market access. These nations would also like to maintain the current GATS architecture of open and positive list approach. In the area of domestic regulation many nations are not very comfortable with the push for a priori transparency because they believe that it makes domestic regulations very vulnerable. Some countries such as the Dominican Republic, El Salvador, and Honduras who have issued a joint proposal on tourism to the GATS Council are concerned with ensuring that domestic regulations and liberalisation in tourism is consistent with sustainable development.
Article XIX of GATS mandates continuing negotiations in services starting in 2000. The negotiations seek to broaden and deepen the GATS by expanding market access, developing disciplines on domestic regulation as well as developing new GATS rules and restrictions (such as emergency safeguards, further constraints on subsidies and the inclusion of government procurement of services). Currently, it is projected that there will be at least three special sessions.
Working within a three-year time limit the focus since August 2000 has been on determining rules, guidelines and procedures for negotiation. This work, which is being carried out in informal sessions in the working parties, will likely continue until December 2000 when submissions of initial market access proposals are due. (However, the US would like to see issues move to the negotiation circle. This can be done quite easily as the members of both groups are the same and so they can with great fluidity move to informal negotiation.) These proposals are expected to expand commitments in national schedules, remove existing limitations on already committed sectors and bind more new and existing commitments. These efforts will culminate in a ‘stock-taking’ exercise in March 20001.
II.5 Trade Related Investment Measures (TRIMS)
TRIMS is an area of importance for the ability of developing countries to protect their balance of payments and ensure linkages in the economy. However, as mandated in the AOA, TRIM as of January 2000 has a prohibition against local content requirement. The South would like TRIMs to be amended to allow the right to use local content policy and to limit the import of certain percentage of firms’ imports. This is a pre-Seattle demand and has not changed substantively since. The request for extension of time frame will be pursued on a case by case basis.
II.6 Trade Related Intellectual Property Rights
According to Lal Das and Raghaven, the double rationale for the TRIP is that time-limited monopoly privileges 1) create incentives for innovation and investment in technology and 2) international rights lead to opportunity for the ‘fruit of this knowledge to cross border (transfer of technology). The Reality is that much of this claim cannot be substantiated and, as noted by Bhagwati, TRIPS cannot be justified on economic grounds. Yet the TRIPS agreement which is a “mélange of EU and US patent treaties which is unstable, systematic ambiguous bit of law has been institutionalised as a binding agreement in the WTO”.
Currently developing countries must introduce intellectual property rights legislation similar to the North. Many developing countries argue that this will hinder technology development and increase technical payments (royalties and licensing fees to TNCS). Additionally, they will lose the policy flexibility of exempting agriculture and medicines from patent laws. The Developing countries argue that TRIPS should be amended to take into account developmental concerns. They would also like the grace period to be extended.
One of the most contentious debates around TRIPS revolves around art. 27.3 (b) and its impact on, and harmonisation, with the Convention on Biological Diversity (CBD) which gives sovereign state the right over biological process; patentability of life forms, development of sui generis issues, and sustainability of genetic material, traditional knowledge and farmers’ rights. The developing countries in particular, the African group, proposed a list of essential drugs of the WHO to be exempted from patentability in 27.3(b.) as these are within the public policy objectives of protecting the public health and nutrition as stipulated in article 8 of the TRIPS (SEATINI July 2000). Furthermore, there is common agreement among development countries that Art 66.2 obligates the North to provide incentive to their enterprises for promoting the transfer of technology to the least developing countries should be vigorously implemented.
Since Seattle there has been a number of meeting held on the TRIPs. The TRIPS Council met in June to review the implementation of TRIPS, however the discussion did not focus on any substantive points, but simply reviewed scope and procedures. There was no discussion on the substance of the provision and no decision was reached. The South would like to see a focus on review of substance of art 27 and are less interested in its implementation or review procedures (SUNS). They would like greater flexibility in creating sui generis system of IPR protection; exclusion of all life forms from IP laws; harmonisation of TRIPS with CBD; protection of traditional knowledge; protection of access to genetic resources and benefit sharing arrangements. There was also a call for the CBD Secretariat to have observer status to the WTO. This decision is still pending but the observer status was extended to WHO and hence “provided some scope for progress on the essential medicine.”
According to Raghavan (2000), the prime objectors of TRIPs debate on this particular issues are the pharmaceutical companies who do not want to this kind of latitude and believe that article 31 gives enough room regarding compulsory license. The US does not want to open up TRIPS for re-negotiation. With regard to geographic indication there was some conflict as Cuba and Switzerland would like to restrict strong protection of geographic indication to wines and spirits while other countries from the South seek additional protection of geographic indication to other goods.
In terms of extension of time of the TRIPS and TRIMS agreements, the SUNS and Bridges report that there was a decision to consider extension requests for TRIPS and a December 1999 agreement to exercise “due restraint” vis a vis TRIMS, TRIPS, customs valuation disputes until consultations on extensions request were completed. The SUNS also reported that despite this ‘gentleman’s agreement’ the US has initiated dispute process against India regarding investment restriction in the automotive sector, related to TRIMS Article III and XI of GATT 1994 (national treatment and quantitative restriction). The EU, Japan and Korea have reserved third party rights. The Philippines and Romania have also been targeted for dispute consultation even though they have formal extension request to the Goods Councils. And in June 2000, US initiated consultation with Argentina and Brazil regarding violation in patent and test data protection under TRIPS.
II.7 The Agreement on Textile and Clothing (ATC)
The SUNS and SEATINI both report that thus far 33 per cent of trade in the clothing and textile sector has been ‘integrated’ by the Quad importing countries. However, this has been undertaken on a narrow technical sense as mainly products not under quota restraint have been liberalized, while few quota restraints have been eliminated. In terms of quota removal the record is dismal: Canada has removed a total of 29 out of 295 restraint products in textile and clothing; the EU, 14 of 219 under restraint or less than 5 per cent of EU imports under quota, while the figure is even lower for clothing. For the US, 13 out of 750 items subject to restraint have been removed, while only 6 per cent of US imports that were actually under specific quota have been freed of restraint; the figure is lower for clothes.
The General Council meeting earlier this year was deadlocked on the implementation of the ATC. Special session discussion took place in June and July. Once again the South reported that there had been no meaningful liberalisation or removal of restraints by EC, US and Canada, the major importers. But the majors claimed that the importing of textiles into their markets have increase since 1995. It was argued that this may be true but the increase in imports is not coming from the South but in fact from other northern countries (SUNS). For example, the increasing imports to the US came from Canada due to no duty of NAFTA. As a result, Canada’s import to the US increased by 132 per cent. Similarly, Italy increased its imports by 58 per cent due to no quota restriction. In addition US industry have invested in Mexican maquiladoras. With regard to the EU, increase in imports from 21 per cent to 32 per cent could be traced to Eastern Europe and Turkey (due to preferential supply arrangements). Overall, the share of the rest of countries to the EU declined between 1990 to 1998 from 42 per cent to 40 per cent (SUNS).
The EU and US also complained of wide spread transhipment and illegal circumvention of quota, which they claimed, have slowed down liberalisation. However, this charge was refuted by the International Textile and Clothing Bureau (ITCB) who relied on US custom data to show that the alleged circumvention of imports was only 0.125 per cent of total imports in 1997, 0.105 per cent in 1998 and 0.068 per cent in 1999. So the charge was greatly exaggerated (SUNS).
It was further noted that the North had also used trade-restricting measures such as ‘unjustified transition safeguards measures and change in rules of origin, cumbersome custom and anti-dumping investigations’.
II.8 Dispute Settlement
As been repeatedly discussed by a number of WTO watchers (Lal Das (1999 and 2000), Raghavan (1997, 1998, 2000), Tandon (1999 and 2000), Khor (1999 and 2000) and Kaukab (1999), the dispute settlement is tilting against the South. There is increasing obligations for the South via ‘perverse interpretation of the rules’ and expanding of the rights of the North (Raghavan 2000).
The dispute settlement is generally lauded for being a tight legalistic and technical system but the way the DSU and the system are functioning is more inclined to the political and biased towards the interest of the Quad. This is contrary to the expectation of the South who expected the DSM to give assurance of trade security and certainty in reigning the misuse and abuse of economic power by the major nations.
Under the GATT system, dispute resolution was based on consensus and could be blocked from beginning to end. When a panel ruling was adopted by a consensus of the contracting parties it meant they agreed with the interpretation of the provision. Under the WTO there is automaticity of panels from beginning until final ruling. The final process requires consensus to be adopted. But there is also automatic adaptation of panel ruling unless consensus is arrived at. But with the appeal process (which was sought by the EC)–a standing appellate body is supposed to hear and rule on issues of laws. Either party may dispute the result and it may then go to appeal. There is a finality to dispute (unlike in the old GATT).
According to Raghaven, ‘now a panel gives an interpretation and it’s automatically adopted. There is often non-legal language”. Raghaven argues that increasingly panels and appellate bodies are usurping the role of the General Council and the Ministerial Council who are legally the only source for authoritative interpretation of agreements. Raghaven and other experts argue that this was supposed to guard against problems emanating from automatic adoption of ruling of the panel which either added to or subtracted from the rights and obligations of Members. But in practice panels and appellate bodies ‘have been giving interpretations and rulings that add to the obligations of the South and the rights of the North. Raghavan argued that this practice is occurring for three important reasons:
1). The Quad is trying to get instituted into the WTO what they could not get in the UR;
2) The role of the WTO Secretariat and its legal division vis a vis the panels and separate secretariat for the standing appellate body in appeal. The Secretariat plays a leading role in all stages of panel proceeding such as suggesting names of panelists. Normally the DG names panellists if parties cannot accept them; but the actual list that they choose from comes from the Secretariat who are likely to select people with a particular ideological bent. The Secretariat guides panels, and gives them notes based on Secretariat notes about interpretation etc; and
3) Imprecisely worded compromise text. There is no provision that the agreements and obligations would be cumulative but panellists have been doing this. Panels have been interpreting obligations under GATT, GATS and TRIPs as cumulative (see the Banana case). This is questionable. Technically GATT 1994 should prevail if there are contradictions with other goods agreement.
Raghavan and other experts propose that these problems could in part be resolved by 1) clarifying the role and status of panels and panel rulings which should be ‘definitive as between parties’; 2) abolishing standing appellate body and the creation of more ad hoc bodies; 3) restore authorities of the Ministerial Council and the General Council to provide authoritative interpretation; 4) the South should have recourse to voting with some safeguard process; and 5) the Secretariat that services the panel should be structurally separated from WTO secretariat so that it is totally independent and play only a service role. If the Secretariat of WTO provides guidance it should be in open panel process in the presence of parties to the dispute; 6) the South should strengthen legal ability; and 6) the General Council should give guideline to panellists that if they find a conflict between two agreements or need clarification of meaning they should refer the matter back to it.
II.9 Technical Assistance and Co-operation: the Integrated Framework (IF)
Integrated framework for trade related technical assistance to least developed countries involves co-ordination with the big six international agencies: WTO, ITC, IMF, UNCTAD, UNDP, and WB. The Multilateral Initiative which was launched in 1997 has had no concrete results. It was meant to be the integration of trade and trade related technical assistance and capacity building into LDCs national development strategy. There was to be a steering committee with representation for both LLDC and donor countries that would provide oversight, policy guidelines and adequate financing. In addition an integrated framework trust fund (IFTF) was to be administered by UNDP. The aim of the initiative, which some WTO ambassador refer to as “If”, is to mainstream trade and trade related assistance into developing countries architectures. There is the hope of raising US$20 million towards IFTC 2001-2003.
However, as with most every thing in the WTO there is misunderstanding about what exactly technical co-operation, in particular, capacity building should be and do. The Quad favour simply ensuring the understanding and implementation of the WTOA. The South want to move beyond that to the strategic objective of reinforcing the capacity to better define trade policy according to national and regional priorities and influences. A meeting of developing country experts argued that there are there are at least three concerns or fundamental components of capacity building: 1) the importance of investing in knowledge research and the protection of traditional knowledge that requires better research and information system; 2). natural resource utilisation and sustainable development; 3). building countries’ negotiation capacity by deepening understanding of what is at stake in negotiations; this requires better links with research and information systems and a more active role in WTO, ISO, CODEX Ailmentaius and UN; and 4) improved communication between various decision makers in the national economy (ICTSD and ENDATIERs Monde meeting in Gabon July 2000).
II.10 Confidence Building Measures
In July there was a special session of GC under the rubric “Implementation issues”. The South complained of serious imbalance and inequities of UR. Problems with the way they were being implemented; no benefit; they cannot undertake more obligations under existing agreement or by new round of negotiations on new issues. On the other hand, the North argued that implementation problem can be addressed via technical assistance and bilateral meeting on a case by case basis to enable implementation. They also argued that other problems required a change in the agreement and that meant a new round. This would imply changes in the balance of rights and obligations of the Marrakech agreement and would need concession elsewhere in the existing agreement or new areas. However, many trade experts, economists and legal scholars all agree that the changes that the South wants can be accomplished without a new round through a process of agreed understandings and interpretation of the General Council.
In terms of process, there are also fundamental differences with the North wanting these issues to be dealt with in subordinate bodies (where the issues could be bottled up and the discussion non-transparent). However, the South wants the subject to be discussed within the General Council. This is especially the case with the ATC agreement where there is no WTO body to deal with it. The outcome of the meeting was that the Director General and the Chair would consult from July to October and there be a meeting of the General Council on this matter in October.
II.11 Customs Valuation
There is strong debate around these issues. The crux of the matter is about the valuation of transactions and what is acceptable proof. Some countries are proposing that an importing country should be able to submit invoices on the transaction value of the import value and could also ask for the export price declared in the exporting countries as the basis for computing the value of the product: the so-called transaction value approach of the Quad. However, this approach is linked to transfer pricing and capital flight. So some South countries, such as India, object due to what they see as great difference between the value declared for imports and that declared for exports in exporting countries which is closely linked to the problem of custom fraud.
II.12 Anti-Dumping
This is another area of debate. In the first case, it is the view of developing countries, such as Chile, that anti-dumping is an issue of ‘over implementation ‘ and distorts the effect of market access negotiation. Anti dumping is seen as ‘trade harassment’ used by the Quad against the South. The South complains that many Quad governments ‘start investigations within days of the ending of a previous investigation when no dumping or injury had been found. They wanted an immediate decision that no second investigation on these same products should be started for at least 365 days after an earlier one is closed. However, the EU and the US argue that this means renegotiating the AD agreement and that should be part of new round. The South counters that this can be dealt with via ‘agreed interpretation or understanding”. Some northern countries also feels that the issue can be dealt with in the Committee on AD since it is highly technical but the South argues that so far the Committee has not been able to deal with it so the GC must take responsibility (SUNS and BRIDGES).
II.13 Conclusion
Fifty years ago the world economy faced the challenge of post-war reconstruction in the North and post-colonial development in the South. To replace the sometimes conflicting and often chaotic bilateral arrangements used to manage the world economy, leading states agreed to create international institutions with responsibility for short-term balance of payments concerns, long-term development issues and the regulation of commodity flows.
In respect of the latter, the WTO, formerly the GATT, has seen its role expand to include the international trade in services and matters of investment. While it has overseen significant increases in world output, debate surrounds the distribution of the ‘gains from trade’, the issues to be considered in new trade talks and the unbalanced nature of existing arrangements.
III. NGOS, CIVIL SOCIETY AND THE GLOBAL ECONOMY
“The challenge is to develop triangular partnerships between the IMF, states, and civil society that contribute to the development of effective and democratic policies in a globalising world.” (Scholte, 1998, p. 43)
This chapter analyses different modes of interaction between NGOs, civil society and international agencies and examines their response to the formation of the WTO. It will provide a template upon which, with appropriate modification, Caribbean civil society actors might build a more effective response to international economic events. It is not solely the IMF, but all international agencies concerned with economic and social development that continue to face this challenge.
III.1 Definition and Rationale
It is necessary to have a working definition of what is meant by the non-government sector and civil society. Traditionally, the former refers to one element of civil society, the set of all nonofficial organisations that campaign and lobby the official sector to change existing conditions and social structures. Civil society is a much broader concept that extends to business associations, organised labour, religious groups, professional bodies, service clubs, academia, citizens’ groups and sport and other recreational associations. It refers therefore to all organisations, profit and non-profit, that operate in the non-state sector.
For the purposes of this study, however, we adopt a restricted, if practical, working definition: Caribbean NGOs and civil society represent the collectivity of all issue-driven, not-for-profit organisations operating in the non-commercial sector. Throughout the study, and following Shamsie , we will use the term ‘civil society organisations’ or CSOs. Naturally this classification, like any other, is bound to exclude the views and interests of key sectors relevant to the discussion. In particular, this study does not focus specifically on the interests of small and medium-sized enterprises in the Caribbean who, arguably, may have as strong a claim for WTO reform as NGOs.
Shamsie suggests that governance issues lie at the heart of CSO motivation for engaging in dialogue with international agencies. Decision-making, whether at the national or international levels, that is not based on the principles of democracy, accountability, legitimacy or transparency, finds itself increasingly called into question. Secondly, CSOs have found that developments in many of their core national issues have their genesis in, or are impacted heavily by, international agreements. Thus they have been forced to respond to these developments and the call for greater and more effective dialogue is one element of this response.
For international agencies, motivation to increase such dialogue range from a need for renewed legitimacy, as in the case of the Organisation of American States (OAS), to a search for more efficient service and programme delivery in an age where, in most developing countries, the role of the State has been narrowed.
Scholte (1998) identifies six reasons for dialogue between CSOs and international agencies:
– Information exchange
– Policy debate
– Channel of public opinion
– Legitimation
– Civic education
– General democratisation
NGOs, by their very purpose, are often the sole repository of information that could be critical for effective policy formulation and management. The exchange of information with international agencies can often unearth specific conditions of economic and social distress at a higher level of disaggregation and so lead to improved policy coordination at the central, more aggregated levels.
Effective dialogue can also provoke greater debate about policy and illuminate alternative perspectives and proposals. This would undoubtedly enrich the policy template and also serve to broaden the seemingly monolithic approach to policy often adopted by international agencies.
Third, CSOs can act as the entry point for international agencies to gauge the views of nonofficial stakeholders on their operations, approach and reputation.
Next, international agencies can seek to have their work “approved” by civil society, which can serve not only to increase ‘buy-in’ and programme success, but as well serve to diffuse public criticism.
A fifth role for increased CSO-international agency exchange is to lead the process of civic education through greater dissemination of information. Finally, Scholte argues, this dialogue can sometimes be helpful in increasing the avenues for greater democratisation in other areas.
III.2 Review of Existing Models
III.2.1 International
III.2.1.1 International Monetary Fund
The IMF has adopted a cautious approach to civil society interaction and dialogue, perhaps mainly as a result of its overwhelmingly negative reputation in many developing countries that have undergone structural adjustment programmes. The Fund now claims that, over and above the public relations value of greater exchange, it understands the significance of civil society from a policy perspective. Scholte has identified five initiatives underlying the new approach.
First, the IMF’s language has been altered to include formerly unheard of terms such as “ownership”, “transparency”, “governance”, and “stakeholders”. This is seen as opening the way for a new dialogue with its civil society partners. Second, the Fund has created some institutional points of contact for civil society access to its operations. Third, greater information dissemination on its part is seen as another way in which its work could be accessed and constructively critiqued. Central to the criticism often laid at the Fund’s doorstep has been the excessive secrecy surrounding its deliberations with governments. Greater openness and transparency is seen as one way to defuse this debate and open new lines of dialogue. Fourth, the Fund has increased its efforts to reach out to civil society by way of official meetings and greater public activities, both of missions when they visit countries and at its home base in Washington, D.C. Fifth, the Fund has argued that its policy agenda is now more reflective of the actual concerns of civil society, reflected in its explicit attention to poverty reduction, social spending, governance issues and environmental degradation. Finally, and related, Fund programmes are supposed to more directly consider “the political context of policy formulation and implementation”, with a view to assessing the “political viability of IMF policy recommendations” (Scholte, 1998, p.44)
One shortcoming of the Fund approach to interchange with civil society is its ad hoc nature. Although the IMF recognises the benefits of greater dialogue, it has not moved toward institutionalising this exchange in a structured way. No formal declaration of principle, purpose, guidelines or objectives on partnership with civil society has as yet been forthcoming from the Fund’s Executive Board and, beyond its External Relations Department, no institutional mechanism for effective dialogue exists.
This leads to other deficiencies in the approach that have more to do with the effectiveness of the measures taken thus far. For instance, many have questioned whether greater contact with representatives of civil society has led to any change in the Fund’s rigid policy programming framework. As well, commentators have pointed to the near imperceptible degree to which the Fund has infused its adjustment programmes and evaluation reports with a focus on gender and environment impacts.
Finally, the Fund model comes into question on the count of its actual civil society outreach thus far. It is unclear whether the new dialogue is meant to include the universe of civil society associations, rather than be limited to contact with the more organised, visible and usually city-based academic and business institutions, and trade unions.
III.2.1.2 The World Bank
The Bank’s experience with civil society is not vastly different from that of the IMF. Institutionally, the Bank has created a Civil Society Thematic Team, comprised of staff who work on civil society issues, some carrying the new title ‘Civil Society Specialists’. This team is part of the NGO and Civil Society Unit, located in the Bank’s Environmentally and Socially Sustainable Development Network. The Bank also hosts an informational website for CSOs. The Bank’s other institutional point of contact is the office of the Vice President of External Affairs. Dialogue and exchange with civil society partners has also been facilitated through the establishment of an NGO-World Bank Committee.
Actual interaction with CSOs occurs on different levels. First, Bank-CSO dialogue and consultation is used as input in the development of the Bank’s Country Assistance Strategies (CASs). According to the Bank, 100 per cent of new CASs prepared in 1999 benefited from such consultation. NGOs are also invited to make inputs into the Bank’s main analytical tools of Poverty Assessments and National Environmental Action Plans. These feed directly into the Bank’s economic and sector work (ESW). Finally, the Bank argues that it works to build partnerships between civil society and member governments, using its role as a convenor in the process, and involving as well private sector and the other donors.
The Bank claims solid results from this approach. Of the World-Bank supported projects approved in 1999, the Bank argues that over 70 per cent involved NGOs and civil society “in some way”, up from six per cent between 1973 and 1988, one third in 1993 and one half in 1994.
However, questions surround the quality of Bank-CSO interaction. Although the Bank’s Board of Directors approved its first operational directive on relations with NGOs in 1981, staff are still hampered by the limited nature of official guidelines and policy advice on integrating CSO concerns into policy work. As well, it is found that, in the policy cycle, CSOs’ input is often at the stage of project implementation rather than design and policy dialogue. Third, the concerns of CSOs do not fit neatly into the standard Bank framework. An example from the Bank’s policy on gender equity illustrates this point. A 1995 Bank study found that, with the issuance of a “formal policy directive on gender” in 1994, “many of the prerequisites for a full implementation of gender issues [were] now in place.” (World Bank, 1995:xi). However, while commending the work, one of the Bank’s senior committees was less upbeat in its appraisal, cautioning that,
“…until gender issues are mainstreamed into overall Bank activities, the development objectives of the institution will not be achieved.” (Josette Murphy, 1995:131, emphasis added.)
III.2.1.3 The World Trade Organisation
The issue of relations between international agencies and non-member interested parties has, perhaps surprisingly, the longest history in the WTO. Surprising because it is to the WTO that the loudest calls have been heard for greater civil society recognition and involvement and more transparency in operations. Yet the WTO’s stillborn predecessor, the International Trade Organisation (ITO), had itemised in 1948 the need to make “suitable arrangements for consultation and co-operation with non-governmental organisations” (Marceau and Pedersen, 1999, p. 8). That the ITO was never established meant that these arrangements were never formalised; it would take another forty-eight years before explicit guidelines for WTO relations with NGOs would be established, two years after the WTO came into being.
The original recommendations of the ITO surrounding NGO contact included the adoption of a list of consultants from existing international NGOs who would be invited to attend, as observers, the ITO’s Annual Conference and receive conference documentation. Notably, they were also to be allowed to propose items for the Conference agenda. For other meetings, specific consultations with NGOs would also take place. The ITO, in the person of its Director-General, would also be able to establish an advisory committee of NGO representatives and make unencumbered decisions on the distribution of NGO documentation to the Annual Conference. There was also a recommendation dealing with differences of opinion between NGOs and the ITO: matters of dispute in the implementation of these recommendations would be referred to the Executive Board and be subject to periodic review, taking the views of the NGOs into full account.
The year 1996 witnessed the adoption of a set of guidelines, agreed by the organisation’s General Council, on WTO-NGO relations. These were meant to provide a framework within which the specific Article governing these relations could be interpreted and operationalised. Article V.2 of the Marrakesh Agreement reads in full:
“The General Council may make appropriate arrangements for consultation and co-operation with non-governmental organisations concerned with matters related to those of the WTO.”
Specific initiatives resulting from the issuance of these guidelines related to transparency of operations, derestriction of documents, the role of the WTO Secretariat in fostering WTO-NGO relations, and restrictions on NGO participation in WTO meetings. In particular, the launch of the WTO Website (and subsequent inclusion of a special NGO section) and an explicit commitment to move towards more rapid and complete derestriction of documents were viewed as essential in improving the transparency of operations. The WTO now compiles and circulates a monthly list of NGO position papers received by its Secretariat. To foster improved relations, arrangements have been made since 1996 for NGO attendance and participation at Ministerial Conferences . As well, regular contact between WTO staff and NGOs has been greatly increased. Since 1994, the WTO has also conducted various symposia on issues of specific concern to NGOs, including environmental policies, sustainable development, and the special conditions of least-developed countries. Concerns with the adequacy of these measures to more fully integrate the concerns of CSO in the trade policy dialogue will form the core of this study’s recommendations and appear in Chapter V.
III.2.1.4 NGO Responses to the Formation of the WTO
Since the establishment of the WTO in 1995 numerous civil society organisations from a variety of perspectives and economic realities (the environment, development, poverty and gender, for example) have been organising around the issues of imbalances, inequities and the social and development impacts of the WTO rules and regulation.
Critical to this, many NGOs argue, is the expansive agenda of the WTO. More importantly they are deeply concerned with the WTO’s impingement on a broad set of internationally and democratically achieved agreements including those on protection of the environment (UNCED 1992), poverty eradication (The Social Summit 1993), gender equality (the Beijing Plan of Action 1995) and human rights (the Universal Declaration of Human Rights 1946).
Before the WTO emerged only a small group of NGOs were actively involved in the trade debate. The comprehensiveness of the final agreement of the Uruguay Round, however, and the creation of an international organisation with the scope, surveillance mechanisms and ability to enforce its rules on the international economy generated tremendous concern and alarm among many members of civil society in the North and South.
As early as the first Ministerial Meeting in Singapore in 1996, a host of NGOs including many who had not worked on trade issues before converged on the meeting. Many were shocked by what they witnessed: the total exclusion and marginalisation of the delegates of developing countries, many of whom were left out of key meetings and events. Also, they experienced plenary sessions where some representatives to the WTO spoke to empty rooms while elsewhere a few of their colleagues clustered with the powerful. They saw completed texts being presented to their country representatives who were coerced or otherwise intimidated into joining a ‘consensus’. Thus, their main roles were limited to rubber stamping the consensus-building process as opposed to being involved in hard-core negotiations of matters critical to the progress of the countries they represented. In many cases some NGOs had more information on the status and substance of key negotiations than the official representatives.
This left a lasting impression on many NGOs, especially those from the South. It also sharpened and consolidated the organising agenda for them. This, coupled with the move by the Quad countries to accelerate liberalisation through calls for a new so-called ‘millennium’ round, generated a strong push to globally organising against the onslaught of free trade and the seeming endless reach of the WTO. Hence from Geneva (1998), to Seattle (1999), to DAVOS (2000) and Prague (2000), international civil society has focused its energy on the Triad of world government: the IMF and the World Bank (both long-standing adversaries around issues of debt and structural adjustment) and the WTO.
The organising around the WTO ranks among the strongest attempts at global co-ordination by NGOs, perhaps comparable to Jubilee 2000 activities. Assisted by Internet technology, NGOs from the North and South launched the ‘WTO! No New Round, Turn Around: Review, Repair and Reform’ campaign from Brussels to Penang. Today, they are in the midst of the post-Seattle, ‘WTO! Shrink or Sink’ campaign.
The result of this massive effort has been a quite detailed analysis of the WTO agreements from a multitude of perspectives and interests as well as the development of impact-based case studies of the social, environmental and economic effects of trade liberalisation on developing countries’ economies.
The larger NGOs have circulated quite effective position papers, statements and presentations which have formed the basis for declarations issued from numerous meetings including UNCTAD X and regional meetings of NGOs in Africa and Asia. Over time, a systematic body of recommendations for addressing imbalances and inequities in the WTO, along with systemic problems, implementation concerns, environmental and sustainable development and livelihood concerns have evolved.
Many of these recommendations took general form up to Seattle and have become the foundation for the general civil society response to the WTO. Over time, backed by research efforts, these are becoming more refined and more nuanced. Others have evolved with the intensification of negotiation of different aspects of the WTO agreements. For example, up until Seattle there tended to be much pre-occupation with implementation issues, the TRIPS, environmental concerns and agriculture. Detailed and systematic analysis and critiques of these and related provisions were undertaken. There was less attention paid to the GATS. However, since Seattle and with the current re-negotiation of GATS, NGOs are increasingly focusing on the details of the provisions and are developing quite specific and focused recommendations on key areas of the agreement. These and other recommendations are highlighted in Chapter V.
Most often the WTO is discussed purely in terms of commercial objectives wherein the key outcomes are increased market access, improved national competitive advantage and increased commodity and service flows. In this framework the emphasis is on rule making and rule enforcement, with a gap between trade and wider economic and social considerations. Very little attention is paid to the process of social adjustment that accompanies trade liberalisation. Hence the implications of the WTO for social objectives and its potential impact on human dignity, as regards life, health, material well being, citizenship and freedom, are ignored.
It is now six years and three ministerial meetings since the WTO came into force and began its oversight of the implementation of the Uruguay Round agreements. Yet the operations of the WTO remain shrouded in secrecy. The success or lack of success of its operations and the URA is also steeped in a host of myths and misconceptions. The reality is, however, to be found in the impact of the implementation process of these agreements on people’s daily lives, as well as in the reality of the power dynamics in which smaller and less powerful governments find themselves.
III.2.2 Regional
III.2.2.1 FTAA
Beginning in December 1994 in Miami, leaders of the Americas, excluding Cuba, initiated a process to arrive at an hemispheric trade agreement in 2005, to be known as the Free Trade Area of the Americas (FTAA). The process was to be conducted within a fairly loose arrangement of periodic meetings of trade ministers which would consider the work of Negotiating Groups, each group itself responsible for a major area of trade negotiations.
The specific initiative used to integrate the views of CSOs in the FTAA process was the creation, in the face of some resistance, of a Special Committee of Government Representatives on the Participation of Civil Society. To solicit CSO opinions and concerns on the process, this committee chose to issue a time-definite “Open Invitation to Civil Society” for submissions on the negotiations. This invitation appeared on the FTAA website and it was agreed that governments would publicise the invitation at home. CSOs were given five months in which to make their submissions.
This initiative was criticised from the start. First, it was argued that the mandate of the special committee was not strong enough, extending only to a “transmittal” of CSO views to trade ministers rather than a provision for making recommendations on the process, a privilege which other committees had. Second, it was felt that its status as a committee and not a negotiating group lessened the significance of its work in the overall process. Third, the open invitation itself was seen as having no explicit link to the work of the negotiating groups, which is where the ‘real’ work was conducted, and this fed the perception that CSO submissions would have no influence on the process. Shamsie (200) reports that the invitation came to be openly referred to as a “mailbox”. Finally, and of perhaps more substance, it was stipulated that submissions from CSOs to the committee could only be ‘transmitted’ to the FTAA process if they were strictly “trade-related matters”. This effectively meant that a large number of CSO views could be excluded from the process if concerns of gender, human rights, youth and community development, and poverty were not clothed in the language of trade.
III.2.2.2 MERCOSUR
In attempting to locate the role of civil society in a regional integration process, Grandi and Bizzózero (1997) provide a map of different “circles of influence” in relation to the principal actors in MERCOSUR, the customs union of the Southern Cone countries formed in 1995. First circle actors include government leaders, the trade negotiating bureaucracy and large business groups. The second circle consists of parliaments and political parties, trade unions, and associations representing small and medium enterprises. In large measure, CSOs , both at the national and regional levels, find themselves in the third circle, farthest away from the core policy- and decision-making bodies. Indeed, at the onset of integration in the early 1990s, these actors “had no specific link to the early stages of the process”. However, once the credibility of the integration process had been established, these actors had to search for institutional mechanisms, at the sub-regional level, to compel attention to their concerns. Sub-regional networks of CSOs were formed that quickly suggested projects on environmental legislation and a demand for environmental harmonisation, as well as proposals by private consumer protection groups for adoption of a regional code.
MERCOSUR’s decision-making bodies have yet to articulate fully drawn out positions and guidelines on CSOs’ participation in their deliberations. While the actors themselves respond through the formation of regional social networks, Grandi and Bizzózero (1997:33) suggest the integration body should establish, at a minimum, “a monitoring center on social actors…so as to provide follow-up on the changing nature of interaction at the international, regional, national and local levels”.
III.2.2.3 CARICOM
The CARICOM Charter of Civil Society was signed in February 1997, more than five years after the idea was first mooted and a quarter century into the life of the regional grouping. The Charter enjoins the Community to respect the rights and dignities of their citizenry in respect of their personal freedoms of association, expression, religious and cultural diversity, equality before law, and the fundamental human rights to life, liberty and personal security.
Articles XVII: 3 and XXII are relevant and offer:
“The States, recognising that integral to the concept of good governance are the complementary roles of government, the social partners and the citizenry, shall ensure that the rights and responsibilities of all are clearly established and that the appropriate environment for their exercise and discharge, as the case may be, is fostered.”
“The States undertake to establish within their respective States a framework for genuine consultations among the social partners in order to reach common understandings on and support for the objectives, contents and implementation of national economic and social programmes and their respective roles and responsibilities in good governance.”(CARICOM, 1997:17, 21, emphasis added)
National undertakings in respect of these strong, albeit loosely drawn, commitments are assessed in the following section. No assessment of the Community’s institutional responsibility and mechanisms can be made, however, issues on which the document is curiously silent. Operationally, a model has evolved whereby representatives of civil society have been invited to make presentations to the Heads of Government Conference, the annual meeting of the Community’s member governments. In the main, labour, and private sector groups have seized this opportunity and latterly, regional CSOs, through the Caribbean Policy Development Centre (CPDC). Questions abound as to the effectiveness of this mechanism for influencing policy.
III.2.3 National
Throughout the region, countries employ varied mechanisms for integration of civil society views into the national decision-making process. For instance, the Barbados Association of Nongovernmental Organisations (BANGO) is regularly invited to present the views of civil society in a consultative process with government agencies. In Jamaica, CSOs are formally represented on the National Planning Council and as well hold regular consultations with the Planning Institute of Jamaica and the Ministry of Foreign Affairs and Foreign Trade. Other recent, if ad hoc, representation included the Prime Minister’s National Round Table Discussions and the committees to examine the gas riots of 1999 and the possibilities for decriminalisation of marijuana. The Dominican Republic has fashioned an altogether different process, that takes the form of scheduled meetings at which members of the public can present views, individual and collective, on proposed positions on national issues.
The results of the DR model have so far been encouraging, and indicate that a further responsibility for public education on critical matters (trade agreements, for instance) is necessary to enhance its effectiveness. No formal consultative mechanism exists in Trinidad and Tobago, and government-CSO dialogue is often reactive, and in the model of an invitation to comment on given policy. To the extent that they exist, institutional entry points to the policy process are strewn across various ministries and explicit, and formalised mandates for CSO exchange are few. In many cases, the region’s national governments are suspicious of, and often hostile to, the interventions of issue-driven civil society organisations. For the most part, Caribbean governments, other than in word, have not yet been swayed by the winds of consultative and participatory democracy.
III.4 Conclusion
A review of different modes of interaction between CSOs and international agencies, and the former’s response to the formation of the WTO, confirms the magnitude of the challenge posed at the beginning of this chapter. While both agree on the benefits to be derived, a great distance still exists between each side’s preferred methods and mechanisms. “Participation” and “dialogue” mean vastly different things to actors on both sides. A critical question, therefore, is whether participation has to be formalised within the institutional structure to be effective. Available evidence suggests that, at a minimum, the issuance of a clearly articulated mandate or policy statement on CSO exchange, followed by the development of operational guidelines and procedures, might prove an optimal approach.
Three lessons can be drawn for Caribbean CSOs wishing to meaningfully impact international trade negotiations. First, the establishment of institutional points of contact, though necessary, is not a sufficient condition for effective CSO exchange. In too many cases CSOs have been shunted aside with the implementation of special committees, civil society liaison officers, and official websites (or, more likely, special sections on official sites). These do not constitute workable invitations to dialogue, as CSOs often remain on the periphery of the policy design process.
Relatedly, CSOs must resist the ‘add-on’ approach to the crafting of new policy in international agencies and process, where concerns of sustainable development, gender and the environment, for instance, are tacked on to existing frameworks. Extensive new work is being done on mainstreaming CSO concerns into technical economic and social frameworks. This process must be deepened.
Finally, the commitment to sustain official dialogue, whatever the form, must be constantly challenged, as attention tends sometimes to dissipate once initial launch and publicising of new schemes is complete. To this point, CSOs’ ability to influence agenda via successful protest and lobbying constitutes the main element of this challenge; this must be complemented by other strategic methods to influence further CSO-international agency dialogue and interaction.
IV. CARIBBEAN NGOS AND CIVIL SOCIETY: ISSUES, POSITIONS AND PRIORITIES
This chapter analyses the specific interests of Caribbean CSOs and their claims for review, repair and reform of the trade liberalisation process. Key issues are examined and prioritised according to the specific criteria of macroeconomic and sectoral impacts, whether real or suggested. The perspective is necessarily cross-thematic, arguing for trade to be disaggregated according to its sectoral impacts on labour, gender, consumers, social development and the environment. These perspectives are used to illustrate the significance of WTO agreements to civil society discourse, and thereby provide a rationale for CSO interest and participation in the global trade negotiations process. The issues identified and discussed below are suggestive rather than exhaustive and are those for which Caribbean CSOs have consistently advocated, and which deeply affect the economic, cultural and social fabric of their societies. Their variety of interests means that Caribbean CSOs cannot be analyzed as a homogenous group with a unique view on the process and potential impact of trade liberalisation. Rather, their issue-specific focus requires a more nuanced examination of both positive and negative attitudes.
IV.1 Background
The contribution of civil society to the development of Caribbean society is well marked. Traditional religion-based support groups were complemented, in the 20th Century, by the rise of the labour movement which itself was responsible for significant change in the political and economic landscape of the region.
In addition, there emerged a host of NGOs in response to the economic difficulties of the 1970s and the resulting debt and structural adjustment problems of the 1980s. The early part of this period saw an unfavourable external environment and an often inconsistent domestic policy framework result in loss of jobs and income, high and variable price levels, and a reduced ability on the part of the government to provide quality social services and maintain health and education infrastructures. As well, Caribbean CSOs have worked for some time on WTO agenda issues, current and proposed, including labour rights, consumer and environmental protection, standards and labelling and dumping. Though these and other specific domestic issues and problems at first defined their work, the perception of globalisation as putative cause soon proved the impetus for Caribbean CSOs to adopt broader perspectives. In a turn of irony, civil society organisations have had to widen their focus from the national to advocate on a global scale and thereby influence national policy. It is critical that they continue to come to terms with the debate on these issues so as to more effectively represent the interests of their constituents.
At the center of Caribbean discussions on the WTO has been the issue of how small states fit into the liberalisation framework. Caribbean NGOs have well-established positions on the aforementioned issues. Like NGOs and civil society actors everywhere, Caribbean non-governmental organisations found themselves outside the main circle of influence when the integration architecture and initial agenda were being designed. Yet, NGOs are credited with bringing them to the forefront of the economic, political and social agenda. However, there is hardly a clearly defined or formal structure that facilitates their consistent participation in dialogue.
Briefly and in terms of analysis, a gender perspective recognises the initial inequities in the system of economic relations between men and women, and the differential impacts of supposedly neutral policies on women, and seeks to correct these. Labour advocacy has always been based on an insistence of fair compensation for work, the provision of safe working conditions and the inclusion of workers in decision-making processes. It has also articulated visions of society informed by equity and social justice. An environmental perspective recognises the impact of human action in pursuit of economic development on the environment and attempts to integrate this concern into the framework of traditional economic analysis.
IV.2 Trade and Development: the North-South Dialogue
The geopolitics of the cold war conditioned the terms of negotiation, and the speed and spread of the market ideology and processes of the old GATT regime (1947). Importantly, it also helped to mitigate and temper the pressures of international competition by allowing the space in which countries such as the Caribbean could push for and received special (non-reciprocal) preferences. It also presented a compelling case for special and differential treatment for developing countries such as the Caribbean.
However, the present post modern phase of globalisation is being driven by a transnational corporate agenda which emphasises the free movement of capital, goods, and services with allowances and contingencies based solely on reciprocity. The market and market ideology dominate fully. Hence, negotiation of international trade rules is increasingly based on the false notion of a ‘level playing field’ and there is less willingness by rich and powerful nations to pay attention to the special and differential needs of developing states such as those in the Caribbean. Where then are the much-heralded positive synergies between trade liberalisation and development to be found?
Current emphasis on untempered trade liberalisation seems to assume that the question of economic development has been solved, or at least resolved. From this perspective, a key policy objective is the fine-tuning of all macroeconomic and social policies in order to promote increased trade and to facilitate the movement of capital. In fact, trade would seem to have become an end in itself. For developing countries, however, trade remains a tool for development. Hence development priorities and needs of the economy should be fundamental to trade policy analysis, research and decision-making. Critically important to this are the basic issues of food security, rural development, social and economic infrastructure, job creation and environmental protection, and the development of sustainable livelihoods in agriculture.
Developing countries, particularly LDCs, find themselves after many years of involvement in the world trade system the exporters of raw materials and primary commodities, including alumina, bauxite, bananas and sugar, which themselves suffer from unstable or declining prices and unfavourable terms of trade. This has, in part, contributed to an external debt crisis which has left these economies extremely fragile and dependent, with serious retrogression in human and social development as well as severely impaired physical infrastructure. They have also been subjected to IMF and IBRD structural adjustment programmes.
Structural adjustment programmes (SAPs) were designed to wholly re-orient developing countries to the global market and pave the way to global trade liberalisation. As such many developing countries’ exposure to the process of trade liberalisation predates the existence of the WTO. However, these early liberalisation measures were not taken into account in the UR negotiations and these countries were therefore required to make further concessions to supplement, and thereby lock-in, these earlier measures.
The capacity of developing countries, in particular LDCs, to further implement another complex array of trade liberalisation rules has been severely stretched and is non-existent in many cases. In sum, it is fair to say that development has been increasingly shunted to the back burner of the trade liberalisation agenda or worse, has been subsumed under trade rules that in fact are working against development. This is so for at least two reasons.
First, current trade rules seek to create a level or equal playing field between unequal partners. However, the level of built-in asymmetries and inequities in the WTO agreements and the subsequent use of the dispute resolution process and trade policy review are more likely to worsen this situation.
Second, the myth of the automatic link between trade liberalisation and growth is increasingly being exposed. Some empirical evidence has been adduced to demonstrate that trade liberalisation does not benefit development. Arguing that “(t)he empirical evidence has been at odds with the promises (of trade liberalisation)”, UNCTAD’s Trade and Development Report 1999 provides evidence that rapid trade liberalisation led to higher average trade deficits in the South as exports stayed flat or did not keep pace with rising imports, side by side with lower average growth rates (p. vi).
In summary, it seems to have become a truism that economic liberalism and free trade creates sustainable development and democracy and that what is important is to therefore create the environment that will allow the market to operate. At the same time, and relatedly, there is now less focus on social policy.
The Caribbean presents a good example of this. The Caribbean in the last few years has become pre-occupied with its international relations (“the internationalization of the state” (Cox 1994) and less focused on development. First, there was the concentration on UR negotiation, the EU-ACP agreement and NAFTA parity. Now it must focus on FTAA, the WTO and its own regionalisation process, CARICOM. The institutional apparatus of global governance in the form of the IBRD, IMF and bilateral overseas development assistance also helped by pointing the state to private sector dialogue, civil service reform, privatisation and capital account liberalisation. Ultimately, the WTO will lead to the harmonisation of fiscal and monetary policy and the transformation of national structures. From this assessment therefore Caribbean CSOs have a strong interest in ensuring a shift in the international trade agenda back to a sustainable development agenda that places poverty reduction as its primary goal.
IV.3 The Issues
IV.3.1 Trade in Goods/Market Access
The WTO agreement on Trade in Goods is wide ranging and establishes rules to impose discipline and predictability on the global flow of commodities. Caribbean CSOs have a special interest in market access in the areas of agriculture and textiles and clothing.
Income and employment remain among the main interests of the vast majority of Caribbean CSOs, both in the protection of existing jobs under threat and the potential of new jobs to be won. The broad perspective of human and social development under which they fall throws into sharp relief the potential of trade liberalisation to undercut inefficient, formerly protected, industries. That these industries may be significant users of abundant labour supplies means that, were alternative production and export possibilities to be immediately unavailable, a significant economic and social problem would emerge. These problems can be exacerbated if no compensatory mechanisms are employed to ease the transition of freed resources to more efficient export sectors. Caribbean CSOs therefore maintain a focus on those parts of the trade liberalisation process that threaten domestic industry without promoting alternative opportunities. An example of this concerns the Agreement on Agriculture.
Under the Uruguay Round, wide-ranging rules to govern liberalisation of agriculture were negotiated including commitments on market access, domestic production support, and export competition. With respect to market access, agreement was reached for the replacement of non-tariff barriers with a tariff-only regime (tariffication) at supposedly equivalent levels of protection. Developed countries were to reduce their average tariffs by 36 per cent over six years from a 1986-88 base. A similar reduction was agreed for export subsidies, in value terms, and 20 per cent in volume terms, this time over a 1986-90 base, while domestic production support was to be reduced by 20 per cent from a 1986-88 base. Developing countries agreed to reductions by two-thirds of the levels of developed countries over ten years. Special treatment and safeguard measures could be invoked, including a delay in tariffication under very specific conditions, to avert negative impacts on developing economies.
Caribbean CSOs should therefore understand that the agreements on agricultural liberalisation, for historical and political economy reasons, have been rendered largely ineffective, subject as they are to myriad exceptions to the agreed disciplines. They should argue that the opaque nature of the tariffication process has resulted in the establishment of rates as prohibitive as the non-tariff barriers they were intended to replace, with levels reaching between 200 to 500 per cent in some developed countries , along some tariff lines. This tariffication process has resulted in heightened inequity and discrimination toward small-scale developing country exporters, particularly in terms of market access. Further, while maintaining a highly subsidised and protected agricultural sector, industrialised countries have sought to reduce opportunities for developing country exports, while themselves seeking to penetrate the latter’s markets. Specifically, the cases of Caribbean bananas and poultry are referenced. Many other export products, including rum, rice and sugar face similar circumstances.
The 1990s saw the longstanding protected markets of Europe for Caribbean bananas come under increasing threat from extra-regional, so-called “dollar” bananas imported from Latin America. Under challenge from Ecuador, the world’s largest banana exporter, and backed by the United States, the EU’s existing banana import regime was successfully challenged and ruled not to be in conformity with WTO regulations. This meant that the Caribbean, although accounting for a mere two per cent of world banana production, would no longer be able to depend on a market that had supported regional agriculture structures since the Lomé Convention was signed between the European Community and the African, Caribbean and Pacific (ACP) group of nations in 1975. As late as 1999, the ACP could count on a protected, duty-free quota of 16 per cent of the EU market worth 857,000 tons, with the Caribbean accounting for 10 per cent of this quota.
In terms of importance to the Caribbean, it was estimated in 1997 that banana production and exports accounted for as much as 60 per cent of export earnings and one third of all employment in the Windward Islands of Dominica, Grenada, St. Lucia and St. Vincent and the Grenadines. For St. Lucia, the major exporter in this grouping, typically high ratios of export earnings, employment and output dependence exist. Banana exports as a percentage of merchandise exports increased from an average of 40 per cent in the period 1981-1984 to an average of 54.9 per cent in 1985-1992. By the period 1996-1998 this average had declined to 54 per cent. In terms of output, banana production measured on average 5.8 per cent of GDP between 1980 and 1993, increasing to an average of 9.5 per cent in 1984-1992, an industry boom phase, and declining to 5.6 per cent between 1996 and 1998. One estimate of overall significance suggests that “banana export growth explains 60 percent of the variation in GDP growth”, using data from 1977 to 1998. For St. Lucia, as indeed for the remaining banana producing islands of the region, a healthy banana industry is critical to overall social and economic development .
The threat of open, unprotected global markets therefore has special significance for Caribbean CSOs who depend, in this instance, on agricultural employment for the livelihoods of their constituency. On the basis of 1998 data, Sandiford (2000) has shown that partial to full liberalisation of the EU market will lead to a decline in banana employment in the Windward Islands of between 50 to 75 per cent. In terms of overall unemployment, he suggests that, in the worst-case scenario of full liberalisation, “for the Windward Islands as a whole, the unemployment situation could be as high as 35.11 per cent”, a 75 per cent increase from existing level of 20.74 per cent. Jamaica, another significant producer, regards the threat to direct employment to be as high as 6,000 jobs.
In terms of strategies, the Caribbean has been forced to respond to imminent full competition, from cheaper, more efficient producers beginning in 2006. In such a scenario, Caribbean producers will face the same flat tariff-only system as other exporters to the EU. Until the current system is dismantled, however, it retains the aforementioned protected quota under what is known as a tariff-quota system. Since this latter implies a mechanism for issuing licences, different licensing options currently being considered range from a system based on allocations according to “historical reference periods” to “first come, first served” arrangements. Arguing that the latter unfairly positions island producers who lack the transportation advantages enjoyed by larger producers, Caribbean exporters support a continuation of the tariff-quota system based on traditional allocations. Further, they maintain that the phase-in period for full tariffication of the EU’s banana import regime should be longer. Internally, they continue to pursue improvements in banana quality and production costs, along with agricultural diversification, all the while affirming that the costs of structurally realigning long-established production platforms are significant enough to justify longer transition periods and the provision of industry specific resources for enhancing competitiveness.
In respect of lessons learnt, Caribbean exporters note the vigorous way in which larger countries, typified in this case by the United States, pursue a liberalisation agenda, completely sidestepping what is manifestly a question of economic development and survival of smaller, less developed states. This particular case also throws into sharp relief the ability of trade liberalisation to pit developing countries against each other, as Caribbean countries have been forced to oppose a new development proposal that would extend duty and quota free access to the EU market to all products from the world’s Least and Less Developed Countries (LLDCs). Since this directly threatens the markets for bananas, sugar and rum, among others, the “Everything But Arms (EBA)” proposal, with its shorter phase-in period and the likelihood of significant dumping of agricultural products, does not find favour among Caribbean countries.
Similar experiences and threats face other aspects of the regional agriculture industry. At threat from further liberalisation of the regional poultry industry, according to one estimate, is employment of 30,000 persons, half of these small farmers, and an investment plant of US$600 million. Already, the industry operates on thin margins, having lost all non-tariff supports as far back as 1986. This contrasts with the heavily protected US industry which exports an unwanted 50 per cent of its broilers and is thereby able to undercut domestic production in developing countries. In contrast to the 35 per cent of the Caribbean market that is fed by imports, less than 4 per cent and 1 per cent of the US and EU market, respectively, is open to foreign suppliers .
This denial of market access and continued protectionism on the part of the rich countries in precisely the areas in which Caribbean CSOs have greatest interest directly reduces confidence in their stated commitment to support development through trade.
Market access issues with respect to agriculture also hold concern for Caribbean CSOs from an environment perspective which, if not always as strongly defended, must be noted. Steininger has argued that “agricultural subsidies…depress international commodity prices, which induces over-exploitation of natural resources, particularly in developing countries which are faced with the need to generate wealth from exports” (Steininger 1996, p. 293). As well, efforts to diversify away from overexploitation of monocrops into fishing, forestry and mining are frustrated, as these sectors remain closed. A further concern is the possibility that consumers may face dangers of food supply contamination from importation of growth hormone-treated meat and genetically modified (GM) foods. The ongoing scientific debate regarding their safety places them squarely among the areas of concern for Caribbean CSOs .
From an overall sustainable development perspective therefore, environmental and labour CSOs of the region may clamour for a more pressing liberalisation of the agricultural sector arrangements of developed countries.
In relation to the environment generally, the preamble of the WTO agreement recognises the need to protect the environment and to promote sustainable development by ensuring that linkages are made between trade and environmental policies. The work of its Committee on Trade and Environment (CTE), informed by the work of previous United Nations-sponsored meetings, such as the Rio Principles and the Bio-diversity Convention, has struggled to integrate the trade and environment agenda into the traditional trade negotiations process. Among proposed issues for inclusion under the WTO agreements are certification of green labelling in relation to biodiversity, the water cycle, hillslope stability and soils, fishing, shrimping.
These negotiations have been stalled in part by the failure
of developed countries to adhere to their commitments in other internationally concluded agreements on the environment. Developing countries have therefore not given significant weight to their professed interest in safeguarding the environment. They argue for specific steps to be taken to ensure enforcement of the agreements reached for the mutual benefit and protection of each trading party. But they insist that there be no explicit link made between trade and the environment in the way proposed by developed countries. In these efforts they see a cover for continued protectionism if strictly drawn environmental standards are not upheld, and moves to eliminate the very sources of their production cost differences and comparative advantages. Caribbean CSOs can undoubtedly agree that efforts to protect the environment must not compromise their ability to earn sustainable livelihoods.
Another area of trade in goods liberalisation of interest to Caribbean CSOs, from an income and employment perspective, concerns textiles and clothing. Once providing as many as 35,000 jobs in Jamaica alone, regional employment and production have been cut as preferences gradually eroded. Here again, CSOs would have noted the reluctance on the part of rich countries to provide increased market access to developing country garments.
They argue that the United States, in backloading its textiles liberalisation to occur mostly after 2005, is stifling the export possibilities of Caribbean textiles workers, including Jamaica and the Dominican Republic. The Multifibre Arrangement (MFA), the long-standing quota-based system, is being phased out over a ten-year period, and products at each of the four stages of processing (tops and yarns, fabrics, made-up textile products, and clothing), brought under WTO arrangements. Caribbean CSOs should note that the majority of this liberalisation (49 per cent of total MFA imports) takes place fully ten years after the establishment of the WTO, while flexibility provisions and other safeguard clauses provide for continued “selective protection”.
IV.3.2 Trade in Services and Intellectual Property
First negotiated under the UR, the General Agreement on Trade in Services (GATS) is a set of multilateral and legally enforceable rules covering international trade in services. The GATS operates on three levels, including a set of general principles and obligations, individual countries’ specific commitments on market access, and annexes containing rules for specific sectors and exemption clauses. To account for the intangibility of services production and consumption, the agreement covers the four possible “modes” of supply: cross-border, consumption abroad, commercial presence via foreign direct investment, and the temporary movement of natural persons. The GATS contains a framework of twenty-nine articles, including the basic obligations of each member. Core obligations include the MFN and national treatment provisions, which ensure, respectively, that services and service suppliers originating in one member be treated no less favourably than any other, and that services, regardless of origin, be treated in like manner to domestic services. Caribbean CSOs’ interests in trade in services liberalisation lie, among other areas, in tourism, finance, telecommunications and information technology, and culture and entertainment. As well, they should urge caution on the application of TRIPS.
In terms of tourism, the region’s labour and environmental CSOs should argue for greater opening on the grounds of new investment and so jobs and income, but are wary of the type of tourism investment a nondiscriminatory regime may imply. Rao (1997b) has shown that tourism accounts for greater than 50 per cent of the surplus of non-factor services in the balance of payments of all CARICOM member states except Trinidad and Tobago; in The Bahamas, Grenada, St. Kitts and Nevis and St. Lucia, its share was over 75 per cent. Undeniably a significant employer of labour , Caribbean CSOs can point to the gains made by Cuba in the 1990s in this sector. In the decade to 2000, this country recorded 18 per cent per annum growth in visitor arrivals, from 340,000 to 1,774,000, 23 per cent growth in revenues from US$243,000 to US$1,952,000, and 11 per cent growth in rooms from 12,900 to 35,293, also on a per annum basis. Employment in the sector grew in the same period from 48,000 to 100,000, with another 200,000 indirect jobs created. As a contributor to balance of payments revenues, the tourism sector ballooned from a share of 4 per cent at the beginning of the decade to 43 per cent by its end . Aware of the sector’s potential to generate growth but recognising the increasing fragility of their ecosystems, CSOs should call for a sustainable tourism approach that eschews the potentially damaging impacts of large hotel based tourism platforms. Rather, governments are urged to find means of encouraging small, eco-sensitive and community based tourism plants .
Though explicit concern with respect to financial sector liberalisation is less, Caribbean CSOs should note the injury likely by the recent unilateral, and extra-WTO, ‘hit-listing’ of many countries’ offshore industries as alleged havens for money laundering . During 2000, many regional offshore business and financial sectors found themselves on lists published by the OECD and the G7 categorising them “as tax havens, as failing to maintain adequate standards of financial sector regulation and oversight, as being ‘uncooperative’ with efforts to meet specified criteria regarding transparency and effective information exchange, or as providing “harmful tax competition” (CDB 2001). Strategically, regional offshore jurisdictions pursued formal dialogue with these agencies into 2001 after protesting the unilateral, exclusionary and non-transparent nature of the initial process of targeting and the subsequent threats of sanctions. In the meantime, remedial legislative and administrative action was implemented in financial oversight arrangements. The CDB reports little immediate impact of this targeting, although many saw this action as another threat to economic diversification in the region. Both the British Virgin Islands and The Bahamas increased their registrations of International Business Corporations by 22 per cent and 18.4 per cent, respectively. Total registrations at end year were 360,000 and 100,092, respectively (CDB 2001). As a final concern, Caribbean CSOs flag the systemic dangers posed by the increasing number of US-dollar based investment products, and their overnight salesmen, which yet escape the oversight and regulation of domestic authorities.
In respect of advocacy for employment and as consumers, Caribbean CSOs should support continued, if cautious, liberalisation in telecommunications and information technology (IT). They recognise the importance of a competitive information and telecommunications sector as a jobs provider in its own right and as input to other industries’ productive platforms. Little dispute, perhaps relevant to working conditions of the female-concentrated staff structures, surrounds the benefits to be had from the expansion or shift by some IT industries to more cost-effective sites in the Caribbean. In recent times, technology-based firms have found it cost effective to move portions of their processes to the Caribbean in order to benefit from lower labour costs and other industry specific advantages. Across the region there is a burgeoning technology sector involved in end stage data processing work for large American corporations, with the attendant income and employment benefits. This, however, has not been an even process. Barbados, once a regional leader in the field, saw annual foreign exchange earnings of US$75 million and close to 3,000 jobs in the mid-90s threatened by rationalisation due to corporate restructurings in the US, an unsteady flow of contracts and weak international marketing . Finally, and from the standpoint of consumers, Caribbean CSOs should urge the dismantling of national telecommunications monopolies which arguably price current services severely in excess of cost of provision and restrain their access to developments at the edge of the technology frontier.
The area of culture and entertainment is of particular significance for regional CSOs who argue that the current asymmetry in the trade is to their economic and cultural disfavour. They should therefore view the continuation of restrictions on movement of natural persons in developed countries as a denial of market access to regional cultural entrepreneurs in music, theatre, film and the fine arts, all of which are areas in which the Caribbean has a fine tradition. On the other hand, they should point to the wide-open spaces long provided for the cultural products of the North and the continuing effects on the region’s social fabric. Many other countries including the European Union, Canada, Australia and the United States take measures, on cultural and social grounds, in support of their arts and letters and protection of cultural identity. Caribbean CSOs should urge governments to once again consider similar preference systems to allow indigenous cultural expressions an equal space .
The WTO agreement on Trade-Related Aspects of Intellectual Property (TRIPS) is also of specific concern to regional civil society. TRIPS, also a first for the UR, seeks to enforce policy harmonisation through protection of intellectual property rights, including trademarks, copyrights and patents, and to stymie the growing trade in counterfeit goods. The agreement is based on MFN and national treatment provisions and requires governments to provide remedies under their domestic law to ensure that IPRs are protected. Thus civil and administrative procedures must be established and clearly detailed to prevent the importation and sale of pirated goods. A global regime of intellectual property protection is to be in place by 2005.
While recognising the commercial interests of companies in possession of rights to certain intellectual property, Caribbean CSOs should understand that the WTO-agreed rules ignore the key development and public health roles of current access mechanisms. In particular, these allowed developing countries to substitute domestically produced generic (read cheaper) drugs for the exorbitantly priced, and patent protected medicines of the North. With the closure of this avenue, except for special conditions of ‘national emergency’, it is projected that the vast majority of local populations will be deprived from accessing essential drugs for their treatment. In this regard, Caribbean CSOs should fear the consequences for their already overstressed and underfunded public health systems.
Other implications of the IPR agreement are to be signalled. While the agreement focuses a high degree of protection on industrial goods, relatively less protection is afforded the IPRs of the developing world in relation to plant and animal related biological processes, including traditional uses of certain herbs, spices and food products. Caribbean CSOs can readily admit that this nonuniformity of approach increases the possibility of a loss of control of intellectual property contained in culturally indigenous remedies and foods while entrenching the technological lead of rich country research and development companies.
IV.3.3. Other Issues
In addition to the above listed issues, Caribbean CSOs maintain a general interest in the areas of human and labour rights and the establishment of core labour standards.
Developing countries have consistently struggled for the exclusion of labour issues from the WTO agreements, maintaining that it should be regarded as a social issue and delinked from the trading system. Despite this, and as a first step in dealing with workers’ rights, Caribbean CSOs wish to register their support for the set of core labour standards, including those relevant to child labour, tabled at the WTO’s Singapore Ministerial in 1996. What they should continue to oppose, in common with CSOs of other developing countries, is inclusion of these standards in the trade negotiations agenda. As labour-abundant countries, these countries share a high degree of suspicion that the real motive of developed countries is not the protection of labour rights , but the reduction of the wage-cost advantage of developing countries.
Developing countries recognise their vulnerability to changes in the regime governing labour standards; especially where it leads to increases in labour costs. On the other hand, the absence of regulation in some areas has led to countless charges of exploitation, as in the cases of child labour in several parts of India. They however fear that industralised countries can use “unfair” labour claims as a protectionist cover to influence the (re) location of industries to their economies. Developing countries on the whole contend that workers rights should be protected through protocols and treaties governed by an autonomous entity such as the International Labour Organisation (ILO). In general, Caribbean CSOs should continue to support the tableau of rights lobbied for by all labour groups, including,
– The recognition of the basic human rights of all workers;
– The design, implementation and enforcement of specific measures to avert the continued exploitation of workers, such as minimum standards of workers rights;
– The reexamination of the process of trade liberalisation, with a view to assessing and reforming the dominance of capital over labour; and
– Deepening cooperation with agencies such as the ILO by granting it observer status in the WTO.
IV.4 Conclusion
Caribbean CSOs view the entire agenda of liberalisation of trade in goods and services with concern. Aware that few, if any, opportunities exist for countries operating outside the WTO-guided global trading regime, they nevertheless point to the example of banana farming in the eastern Caribbean and textiles in Central America as portent of things to come. Specifically, their interest in jobs and social welfare, gender equity and the protection of the environment leads to a focus on the areas of agriculture, textiles, tourism, finance, telecommunications and information technology, culture and entertainment, and intellectual property, and the impact of changes in the rules governing their trade. While not exhaustive, as the impact of further liberalisation on other critical sectors remains to be assessed, Caribbean CSOs should urge caution as countries seek to exploit the rules of the WTO to their advantage.
V. REFORMING THE PROCESS: A CARIBBEAN NGO/CIVIL SOCIETY PERSPECTIVE
This concluding chapter lists an agenda for action on the part of both Caribbean NGOs and civil society and key players in international trade negotiations, including the WTO itself. The proposed reforms are ambitious and wide ranging, touching process, issues, approaches and institutions, at levels local, national, regional and global.
V.1 Reforming the WTO
V.1.1 Democracy and Governance
A central tenet of reform of the WTO should be true democratisation of the organisation, from its operational and administrative structures to the processes and approaches to trade negotiations. Currently the paradox exists of a consensus-based organisation promoting an agenda of a minority – the developed countries. This has come about because of the way in which supposedly informal talks result in pre-agreed items being inserted into the formal process. These informal negotiations, based on more intimate groupings between small groups of developed and developing countries, are really based on extant power relations. Naturally, the resulting pre-agreements reflect the views of the larger countries and guarantee that little formal dissent is voiced in the formal talks. Caribbean NGOs insist that the current approach to agenda-setting within the WTO be reviewed, perhaps with a view to making it more transparent and reflective of initial, and so true, country positions rather than of positions that smaller countries were pressured into adopting.
– Lobby for greater democratization of the WTO, especially in the determination of agenda items.
The second reform element must be the institutionalisation of entry, enquiry and other points of contact for NGO and civil society dialogue with the WTO. This has to go beyond the present arrangement where, not too long ago, an NGO presence at WTO deliberations was equated to that of media coverage of the event. Some progress has been made but the WTO has to go further. It is not enough to say that, as an agreement between governments, only governments can direct and influence trade talks. Internal reform must now reflect an appreciation of the obvious: that the mandate of governments may be more narrowly defined than that expressed by civil society concerns. A formally established place for these latter voices to be heard would undoubtedly enrich the trade dialogue. From a policy perspective as well, greater ownership of the process should increase policy credibility and its chances of success.
– Lobby for the institutionalization of entry and enquiry points for greater civil society contact and dialogue.
V.1.2 Cool Down the Pace…
Caribbean CSOs believe that a process of review of the specific economic outcomes of previous measures and agreements on individual countries, regions and groupings must be made an integral part of the work of the WTO. Ideally, this should precede every new round of talks. This would undoubtedly slow the pace of the globalisation agenda of rich countries but it would reveal, from the authority of the responsible organisation, how the global gains from trade are being distributed. The notions of compensation to losers, adjustment and transition mechanisms, and the need for increased technical assistance to enhance developing country productivity in selected industries become relevant. By way of method, Caribbean civil society notes that the TPRM currently exists to review trade policies of member countries on a rotating basis, and they recommend that it be used to put in place this broader review process. Until both the impact of already agreed-to and implemented decisions on poverty levels and sustainable human development and the capacity of developing countries to implement these decisions are assessed, Caribbean CSOs support the position that no new round of negotiations should be pursued.
– Advocate for an expanded and deepened review process as a precursor to new talks.
V.1.3. Broadening and Deepening
Caribbean CSOs reject the approach to trade negotiations that is narrowly defined to exclude issues of social and human development. They argue that, rather than a rush to deepen the existing liberalisation agenda, the WTO must seek to broaden its approach by adopting as central elements the methodologies of gender and sustainable development, among others. Confronting the trade agenda with a gender perspective reflects the reality that liberalisation and other structural economic changes can have a differential impact on women. For example, decisions regarding trade, particularly in agriculture, manufactured goods and some service industries, affect women’s employment. In particular industries and sectors, textiles and tourism services central among them, trade liberalisation may cause female employment to increase but, under certain conditions, can be at the cost of poor working conditions and wages. Additionally, liberalisation may also act to reduce women’s employment activities and opportunities because of the influx of cheaper priced foreign goods. This approach therefore forces policy-makers to appreciate the need to implement specific compensating strategies to ensure that policies and projects will have a positive outcome for women.
– Insist that gender, environment and sustainable development methodologies be made central elements of ongoing trade negotiations.
Against this background, the Women’s movement has called on decision-makers to make the link between trade and gender issues. Specifically, Caribbean CSOs should note the call by Women in Development (WIDE) for :
– The integration of gender analyses and impact assessments in all WTO polices, through the use of gender disaggregated data and gender and trade indicators;
– The WTO to undertake the integration of a comprehensive gender perspective into all activities;
– Introduction of gender training in all WTO bodies to raise an awareness and understanding of gender issues;
– The appointment of a substantial number of women committed to gender issues at levels of high decision-making, and
– The inclusion of a consistent and comprehensive gender analysis in the TPRB’s guidelines and procedures.
In the final analysis, Caribbean CSOs argue that the overall objective of broadening the trade agenda is to ensure the identification of systemic methodologies for integrating civil society in (i) preparation for negotiations; (ii) actual negotiations; and (iii) actual implementation of negotiated agreements.
V.2 Reforming Caribbean Trade Negotiation Machinery
Caribbean CSOs recognise the important role played by the Regional Negotiating Machinery in pursuing a coherent trade policy agenda on behalf of the region’s member governments. They yet offer the following suggestions on certain elements of the approach.
V.2.1 Participation and Accountability
Caribbean CSOs find that the approach of regional bodies responsible for external trade relations too often mimics the process at the international level. CARICOM, and latterly the RNM, has pursued a trade mandate agreed by regional heads but divorced from considerations “on the ground”, including poverty eradication and the impact of trade liberalisation on the status of women and the environment. This work remains closed to the contributions and influence of CSOs.
CSOs call for an opening up of the work of the RNM to national and regional CSOs. One element must be greater outreach, by way of increased communication between the Machinery and civil society representatives. More than that, however, current policy positions must be subject to CSO scrutiny, and CSO input into the crafting of future positions must be enhanced. The region must join the international community in recognising CSOs as a repository of useful and relevant information and expertise.
– Lobby for greater dialogue, accountability and transparency in CARICOM and the Regional Negotiating Machinery and for a more proactive role in determining negotiation mandates and the regular monitoring of progress in negotiations.
– Craft and popularize critical analyses of adopted negotiating positions.
V.2.2 Using the Rules
Another reform element directed at regional processes concerns the harnessing and dissemination of critical information on the nature of the WTO-led rules-based trading system and the leverage or manoeuvring room yet available to developing countries. Margins of freedom, in relation to ‘special and differential’ treatment, the use of safeguards , subsidies and other domestic support, currently exist. Greater use of these measures to allow for longer transition periods to full compliance, more relevant thresholds and increased market access in developed countries would serve to protect the interests of Caribbean CSOs.
Caribbean CSOs also should encourage a more critical assessment of continued denial of market access by developed countries through the use of various non-tariff measures. Not only will exposure serve to add weight to the regional negotiating position but as well allow for some ‘mirroring’ of these techniques. For instance, developed countries continue to use excessive standards, testing, labelling and certification procedures as protection mechanisms. Also, government procurement policies to encourage local industry are still not subject to binding multilateral commitments. The Machinery must ensure that these, and other instances, are well documented. Whether this possible or not is a matter of capacity to use the provisions as well as interpretation that comes with dispute settlement cases. What is clear is that there is quite some work to be done on understanding and exploring the market access and national treatment obligations of the agreement.
– Design and implement popular education methods to raise awareness of the significance of the trade negotiations process to social and economic development and to increase economic and trade literacy for broad cross-sections of society, including key decision makers in government, business and civil society.
– Lobby for the RNM to broaden its mandate to include greater popular understanding of the process and implications of trade negotiations.
V.2.3 Industry and Sector Research
Another area for RNM attention is the conduct of industry and sector research to assess areas of current and potential competitiveness and to gauge the potential impact of further trade liberalisation. The impact of new technology has been to modify the old resource endowments-based comparative advantages. Advances in telecommunications and Internet technologies in particular have revealed new opportunities for Caribbean countries, with their highly literate populations, to exploit language and time zone advantages, but fundamental research is often necessary to seal the argument. Caribbean CSOs recommend that the RNM upgrade its technical and economic research capability to a level commensurate with its negotiating expertise.
– Insist on a higher prioritization for industry and sectoral research in the work programmes of the RNM, regional governments and national trade and development agencies.
Impact assessment research is perhaps even more critical, and here the argument for its inclusion in the RNM’s work programme is more nuanced. Trade liberalisation is often non-neutral in its impact on women, for instance in sectors where women constitute the majority of the labour force, and so sector impacts must be carried further. Caribbean CSOs recommend that this research be made to include, where appropriate, gender and environmental assessments. Opportunities exist for CSOs themselves to be brought into the process by way of these assessments, especially in areas where they already possess comparative advantages in knowledge and approach. The adoption of a systematic and transparent approach to commissioning such studies would serve as an inclusive strategy in empowering civil society to impact the trade negotiations process. From a policy perspective as well, such analyses would also help to convince governments of the need for compensating mechanisms to ease transition burdens of ongoing liberalization and possibly, in some cases, to recognize the need for retreat.
– Develop expertise in research assessments employing the relevant methodologies of gender, environment and sustainable development.
V.2.4 Caribbean Governments and National Debate
Caribbean CSOs recognise the limits to effectiveness and influence posed by small governments having to negotiate in large groupings. While commending the current regional approach, they recommend that more strategic alliances be struck to enhance negotiating space. These may or may not be informed by geographic and historical considerations, but should certainly take account of mutual interests shaped by strategic production and trade relationships.
The argument for greater openness on the part of the regional negotiating machinery is doubly made in the case of national arrangements. Far too often little public debate on critical issues is encouraged by member governments and positions often represent official mandates rather than consensus views. In the face of the explicit commitments agreed in the CARICOM Charter on Civil Society discussed in Chapter III, this approach is untenable. On approach is for Caribbean governments to co-organise with civil society a series of regional consultations to identify key issues and objectives of all stakeholders in WTO negotiations, and to identify previously mentioned methodologies to guide reform of the negotiating machinery and process.
– Lobby for and engage in consultations on the trade negotiations process at the regional and national levels.
V.3 Reforming Caribbean NGOs and Civil Society
In calling for reform of the trade liberalisation process, Caribbean CSOs are well aware that their own internal process can be improved. In particular, they must constantly strive for institutional strengthening to provide for a greater capacity to contribute more effectively to the process. Examples abound of CSOs winning the struggle to sit at the table only to find themselves compromised by the substance of the discussion. They must not be discouraged. Indeed, they must regard as a prime objective raising the literacy of their membership in relevant areas, some admittedly arcane .
– Engage in institutional strengthening measures to more effectively impact the trade negotiations process.
Caribbean CSOs must also seek to contribute to the crafting of negotiation positions, now reflective of gender, environment and sustainable development approaches. As previously mentioned, they may have a central role to play in studies commissioned by a reformed regional negotiation machinery. Additionally, CSOs must ensure, through constant internal review, that their core interests are consistently represented by leaders who, experience has shown, can sometimes be co-opted by official processes. Finally, and in recognition of the fragility of funding sources, regional CSOs must be engaged in a constant search for operational economies and a greater degree of autonomy through the building of regional and international alliances. In terms of actual participation in the process, one approach might be to mirror the actual trade negotiations process itself, by a nomination of various thematic or geographically indicated chairs of CSO groups, in a rotating system. With appropriate checks, this would serve to promote expertise throughout regional CSO membership, rather than preserve the stale structure of well-funded and ‘favoured’ CSO representatives everywhere in attendance.
– Pursue operational economies and greater autonomy to ensure a sustainable presence in the process of trade negotiations.
– Establish more effective CSO groupings, perhaps along thematic or geographic lines, for participation at every level of activity of the multilateral trade system.
– Continuously develop greater expertise in the technical, administrative, legal and regulatory issues that constitute the fabric of trade negotiations.
V.4 The Way forward for CPDC/CRG
The discussions in this report along with the overview of civil society activities and recommendations regarding the multilateral trading system provide some pointers for CPDC/CRG to move forward on trade analysis and advocacy directed at its member institutions, regional governments and publics, and the WTO.
There is certainly a good body of analysis of the WTO provisions and an ever-growing network of partners to engage with in research, policy analysis and advocacy. What is missing is the relevance of this work to the Caribbean. Certainly the Caribbean as a geopolitical region has particular specificities which will require analysis and strategic interventions that only locally, nationally or regionally based work can provide.
There are some obvious entry points. First, and as mentioned above, there is a need for clear and strategic thinking regarding the various provisions of the WTO and their likely impacts on the different countries of the region, along with an identification of appropriate remedial strategies. These latter will have to address given levels of export dependence, degrees of openness, size and political leverage. Also important is the need for proper accounting of the nature and impact of liberalisation thus far, and of the likely impact of negotiations, both of the WTO’s built-in agenda and of issues to be included in new rounds. In this regard, Caribbean CSOs are specifically concerned that reintroduction of investment as an agenda item, properly rejected in its original form as the OECD-sponsored MAI initiative, should be stoutly resisted.
The development of a clear analysis in the area of trade in services by trade negotiators and policy advisers is essential for effective advocacy throughout the region. This is particularly important in light of the push for accelerating the liberalisation of services; decision makers therefore need to develop a full and complete understanding of what is at stake, and the opportunities, challenges and risks of further commitments on services to sustainable development, poverty eradication and equity.
It is therefore critical that in anticipation of a two to three year services negotiation process and movement towards a comprehensive new round of multilateral negotiation that CPDC/CRG develop a strategic understanding of GATS (beyond the mastery of technical details). Such an awareness can only come from understanding the strengths and weaknesses of Caribbean economies and the (perceived) opportunities and dangers in GATS. It also requires that CPDC/CRG and regional negotiators develop their understanding of the flexibility/inflexibility in GATS.
Similar kinds of work need to be undertaken for all the WTO provisions. GATS is used as an example because it is the matter that seems to require urgent attention as proposals are expected to be on the table by the end of the year on which discussions will take place at a special session in
March 2001.
Finally, CPDC/CRG should consider developing an agenda that focuses on the social, gender, environmental and development impact of liberalisation in the region, building on a number of cases studies already undertaken by international NGOs and creating a process for identifying and remedying gaps in analysis. This may require a series of consultations at country level as well as regionally. Consultations and seminars with line ministries and trade negotiators should be conducted to illuminate some of these issues and lead to a better understanding of the impact of trade policy in the region.
An advocacy strategy by the CPDC/CRG through its partners and networks should include, as a primary focus, the following elements:
– Lobby for greater democratization of the WTO, especially in the determination of agenda items.
– Lobby for the institutionalization of entry and enquiry points for greater civil society contact and dialogue.
– Advocate for an expanded and deepened review process as a precursor to new talks.
– Insist that gender, environment and sustainable development methodologies be made central elements of ongoing trade negotiations.
– Lobby for greater dialogue, accountability and transparency in CARICOM and the Regional Negotiating Machinery and for a more proactive role in determining negotiation mandates and the regular monitoring of progress in negotiations.
– Craft and popularize critical analyses of adopted negotiating positions.
– Design and implement popular education methods to raise awareness of the significance of the trade negotiations process to social and economic development and to increase economic and trade literacy for broad cross-sections of society, including key decision makers in government, business and civil society.
– Lobby for the RNM to broaden its mandate to include greater popular understanding of the process and implications of trade negotiations.
– Insist on a higher prioritization for industry and sectoral research in the work programmes of the RNM, regional governments and national trade and development agencies.
– Develop expertise in research assessments employing the relevant methodologies of gender, environment and sustainable development.
– Lobby for and engage in consultations on the trade negotiations process at the regional and national levels.
– Engage in institutional strengthening measures to more effectively impact the trade negotiations process.
– Pursue operational economies and greater autonomy to ensure a sustainable presence in the process of trade negotiations.
– Establish more effective CSO groupings, perhaps along thematic or geographic lines, for participation at every level of activity of the multilateral trade system.
– Continuously develop greater expertise in the technical, administrative, legal and regulatory issues that constitute the fabric of trade negotiations.
ACRONYMS
– BWI Bretton Woods Institution
– CARICOM Caribbean Community
– CSO Civil Society Organisation
– CTE Committee on Trade and Environment
– EU European Union
– FDI Foreign Direct Investment
– FTAA Free Trade Area of the Americas
– GATS General Agreement on Trade in Services
– GATT General Agreement on Tariffs and Trade
– GM Genetically modified
– IBRD International Bank for Reconstruction and Development
– ILO International Labour Organisation.
– IT Information Technology
– ITO International Trade Organisation
– IMF International Monetary Fund
– MFA Multifibre Arrangement
– MTS Multilateral Trading System
– NAFTA North American Free Trade Agreement
– NGO Nongovernmental organisation
– OAS Organisation of American States
– RNM Regional Negotiating Machinery
– SPS Sanitary and Phytosanitary measures
– TNC Transnational Corporation
– TPRM Trade Policy Review Mechanism
– TPRB Trade Policy Review Board
– TRIMS Trade Related Investment Measures
– TRIPS Trade-related aspects of Intellectual Property Rights
– UN United Nations
– UNCTAD United Nations Conference on Trade and Development
– UR Uruguay Round
– WTO World Trade Organisation
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