Two good articles from Focus on Trade

Two interesting pieces offering Southern perspectives on recent trade talks.

Steven Sherman

ORIGINAL FTAA VISION SCRAPPED AS PEOPLE POUR INTO
MIAMI FOR ANTI-FREE TRADE PROTEST
By Walden Bello*

MIAMI, 20 November -- The United States will try to paint the
Miami meeting of the Free Trade of the Americas (FTAA) as a
success, but the reality is that the anti-FTAA side has pulled off a
victory.  This was the assessment of movement leaders as
thousands of protesters from all over the Americas converged on
this city for Friday’s March for Global Justice and the Miami-Dade
Country police mounted a massive show of force to intimidate the
opposition.

PROTESTERS NOT INTIMIDATED
That the people were not cowed was evident at the “Gala for Global
Justice” on the evening of Wednesday, November 19.  Opposition
to the FTAA and people coming together for “another world” was
the theme of event, which featured a program of music and
speeches from activists from throughout the Americas.

Representing the US labor movement in the program, Leo Girard,
president of the United Steelworkers Union, declared, “We will not
let them steal our sovereignty.  This is not just about trade but also
about investment and privileges for greedy investors and financiers.
This fight is a fight for our children and grandchildren.”  He singled
out the contribution of student activists against sweatshops, telling
the story of how earlier in the afternoon, “on the way to Guzman
Park to attend the People’s Forum, we saw a group of students
surrounded by cops and searched.  And guess what, hundreds of
steelworkers surrounded the cops and told them to let the students
go.  And they did.”  And that brought the crowd to its feet.

WASHINGTON RETREATS ON FTAA
The big news on Wednesday, however, was the scrapping of the
original FTAA vision.  “The US wanted a binding comprehensive
agreement with disciplines all the way through,” said one official
delegate from a Latin American country who has participated in the
negotiations.  “The draft ministerial declaration coming out of the
Trade Negotiations Committee clearly is a retreat from that.”

Instead, the draft proposes a “flexible” process where governments
can decide to exclude some areas from FTAA negotiations for
liberalization even as other governments negotiate liberalization in
these areas.  As the declaration unambiguously states, “Ministers
recognize that countries may assume different levels of
commitments…In addition, negotiations should allow for countries
that so choose, within the FTAA, to agree to additional obligations
and benefits.”

This will allow Brazil and the other members of the Mercosur trade
area to withdraw from negotiations on investment, intellectual
property, government procurement, services, investment,
competition policy, and other areas they do not wish to subject to
mandatory liberalization.  At the same time, it will allow the US to
continue its policies of massive subsidization of its agriculture by
not joining negotiations on agriculture.  The result is what pundits
have called “FTAA lite” or “FTAA a la carte.”

Essentially, the ministerial declaration is the one tabled by Brazil
at the Trade Negotiating Committee meeting in San Salvador last
July.  As the Latin American negotiator put it, “Brazil was saying,
look, 2003 is different from 1994, when Clinton launched the FTAA
negotiations.  Free trade policies have brought about bad results
throughout Latin America.  People have ousted neoliberal
governments.  There was no way the US was going to get the
comprehensive free trade agreement it wanted today.”

To the surprise of many, the US agreed to the Brazilian
compromise a few weeks before Miami.  But, according to the
Latin American negotiator, the alternative was another Cancun,
referring to the collapse of the fifth ministerial of the World Trade
Organization, owing to widely disparate positions between Brazil
and its allies and Washington, Canada, and their supporters.  This
was not another high-profile setback the Bush administrator could
afford coming into an election year.

Despite the US stand-down, says Timi Gerson, a trade campaigner
with Public Citizen, it will paint Miami as a success.  “They’ll say
the train has not be derailed, as in Cancun, that it is leaving Miami
with nine boxcars or negotiating areas intact.  What they’ll try to
conceal is that those boxcars are empty because people
throughout the Americas have refused to go aboard.”
Activists Caution Vigilance

To counter Washington’s spin on events while calling for continued
vigilance among FTAA forces, the broad alliance Continental
Campaign against the Americas issued the following statement on
Wednesday, May 19, shortly after the appearance of the draft
declaration:

“We are witnessing in Miami the failure of the original FTAA
project, and at the same time the emergence of a new and perhaps
more dangerous proposal for negotiations.

“The United States will try and present the ‘flexible’ proposal to
move the negotiations forward as a success of the Ministerial
Meeting.  But this is only a fa?ade…Miami has revealed that the
United States has lost its capacity to convince people of the virtues
of its ‘free’ trade project, and is using force to impose its
objectives, trying to isolate the governments of the continent that
are proposing a different vision.”

To Brazilian trade organizer Fatima Mello, although the original
FTAA vision has been disrupted, “So long as the FTAA’s
framework and basic principles remain intact, the imposition of
neoliberal trade policies will remain a threat, so it is important to
oppose even this watered-down version of the FTAA.”

To cover its tactical retreat on the FTAA, US Trade Representative
Robert Zoellick announced on Wednesday that Washington would
launch negotiations for bilateral free trade pacts with the Dominican
Republic, Panama, Bolivia, Colombia, Ecuador, and Peru.   To
Sarah Anderson, trade analyst of the Institute for Policy Studies in
Washington, the US move is a confession of weakness.  “They’re
admitting they can’t get what they want via the FTAA, and that’s
because people and governments are resisting throughout the
Americas.”

*Walden Bello is executive director of Focus on the Global South

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THE POST-CANCUN BACKLASH, AND SEVEN STRATEGIES TO
KEEP THE WTO OFF THE TRACKS
By Aileen Kwa*

GATT and WTO Ministerial meetings have the tradition of
collapsing when developing countries stand up for their legitimate
rights and interests. This has been the situation since the Uruguay
Round, during which two ministerials collapsed -- in Montreal
(1988) and Brussels (1990). The sticking point was agriculture and
the refusal of developing countries to accept the double standards
of protectionism practiced by the North, whilst at the same time
imposing market opening on the South.

Similarly, the collapse of the Seattle Ministerial in 1999 was in
large part due to the refusal of developing countries to be ignored in
the process and to be forced to accept a package agreed by the
major powers amongst themselves.

Cancun  - four years on - is little different. The US, EU and their
allies, while brandishing rhetoric and appearing to be benevolent,
were merely trying, yet again, to extract the highest price from the
developing world without giving anything in return. Developing
countries did not back down in their fight for more balance in the
package. The G-20 coalition continued to fight for less distortions
in agriculture trade, and the G-70 (or Alliance as they are now
called), composed of the African Union, ACP (Africa, Caribbean
and Pacific) and LDCs (least developed countries), refused to
accept new negotiations in the ‘Singapore issues’. The US was
unwilling to budge in agriculture, nor to give anything on the cotton
issue where four West African countries – Benin, Burkino Faso,
Mali and Chad -- had made a powerful call for the elimination of
cotton subsidies. The cotton lobby in the US is too powerful, and
the Bush administration, heading into elections in 2004, was not
interested in antagonizing them.

Post-Cancun, man in Geneva speculate that the US, angered by
developing countries’ refusal to back down, and their inability to
force their agenda onto the developing world, engineered for the
meeting to end when it did.

However, if the not-so-distant Seattle, post-Seattle and the 2001
Doha Ministerial negotiations are indicative, talks will restart, and in
response to the Cancun show of strength from the South, the
counter-offensive from US and EU will be all the more aggressive.

THE US AND EU HIT BACK: THE BLAME GAME
Already, the counter-offensive is in full swing. The blame game,
which EU trade commissioner Pascal Lamy promised in Cancun
he would not play, is underway. Both the US and EU are spinning
the story that the Cancun collapse was the fault of developing
countries, blaming them for being rhetorical rather than serious in
the negotiations. Should they want any movement now, the EU and
US insist, the developing countries will have to come up with a
better offer.

US trade representative Robert Zoellick, right after the collapse of
Cancun, also said that “The harsh rhetoric of the `won't do'
overwhelmed the concerted efforts of the `can do'.” More recently,
the US Commerce under-secretary, Grant Aldonas said that there
was "not a lot of incentive" for the US and the EU to "lower
politically sensitive trade barriers if poor countries refused to lower
theirs."

Commissioner Lamy has been quoted as saying that the EC and
the US "will be waiting for a number of positive signals coming from
other parts of the trade community," such as the G-20 and the G-
70.

Developing country ministers and ambassadors have also come
under fire. The US, for instance, called a meeting of Washington-
based developing country negotiators to complain about the
unreasonable positions of their Geneva counterparts. This led to
the Nigerian Washington based ambassador writing to his
president Obasanjo, questioning the position that the Nigerian
Geneva-based ambassador was taking. One LDC African delegate,
whose minister was prominent in Cancun, said that his minister is
now being called by “everyone, including the US”, and made to
answer the question of how the Cancun talks can be put back on
track. The World Bank and IMF have also written to many
developing country heads of state instructing them to restart talks,
obviously with the implication that funds could be given or
withdrawn.

On November 13 and 14 an exclusive, informal ministerial meeting
was held in Cairo between a small group of African ministers. The
meeting was convened by the WTO’s director general Supachai
Panitchpakdi, and his chef de cabinet, Stuart Harbinson. Ministers
from Benin, Botswana, Burkina Faso, Chad, Kenya, Lesotho, Mali,
Mauritius, Nigeria, Senegal, South Africa and the host, Egypt, were
present. The topic under discussion was how African ministers can
take steps to move the talks forward. It is clear that the DG
Supachai is attempting to do all in his power to call ministers to be
more flexible. A key area of discussion in the Cairo meeting was
the Singapore issues.

In addition, the US has exerted considerable pressure on the G-20
to break the coalition. Six countries have pulled out of the grouping
so far – El Salvador, Guatemala, Peru, Ecuador, Columbia and
Costa Rica -- as a result of threats that their FTAs and other
trading arrangements with the US would be jeopardised.

Brazil, the leader of the G-20, both in Cancun and post-Cancun has
been demonized by the US as trying to create a North-South split
in the WTO membership.

CURRENT US/EU ATTEMPTS TO WRESTLE GROUND FROM
DEVELOPING COUNTRIES
In Geneva, the US and EU have found, in the Uruguay ambassador
Perez del Castillo, an appropriate spokesperson for their interests.
Del Castillo is the current chair of the general council and has set
himself the task of attempting to complete the work that ministers
did not finish in Cancun by the 15 December senior official meeting
in Geneva. He has chosen four of the most contentious issues to
begin consultations as a way to unlock the negotiations:
agriculture, cotton, Singapore issues and non-agriculture market
access (NAMA).

The main negotiations are held in non-transparent consultations of
only about 30 members (or ‘green room’ meetings). In agriculture
and NAMA, del Castillo has been pushing hard for the developing
countries to accept the Cancun-produced Derbez text (named after
the Mexican minister presiding at Cancun).

In agriculture, the Derbez text is very similar to the joint US/EU
paper that was submitted to the WTO membership in August,
which took into account only the US and EU agricultural interests.
It calls for drastic market access openings in such a way that it
would hit the developing countries hard, but not the developed
countries, and does not deal effectively with subsidies that
contribute directly or indirectly to export dumping.

Similarly, in the non-agriculture market access negotiations, the
Derbez text does not reflect developing country concerns. It does
not include commitments made in the Doha Declaration (such as
the concept of less than full reciprocity) but enhances developed
countries’ interests, for instance by calling for a non-linear formula,
as well as a sectoral liberalization approach. (See following article
for full discussions of this point.) The majority of developing
countries have been vehemently opposed to both these
liberalization strategies since their industries are more vulnerable,
and they will be celled to liberalize more than the developed
countries. Neither does the text call on the developed world to
reduce their protection in any meaningful way, since it glosses over
the issue of non-tariff barriers - the most common way the
developed world protects their industrial products. UNCTAD has
already predicted that if the current liberalization agenda is adopted
there will be serious destruction to many countries’ already fragile
industrial base, leading to deindustrialization.

There is no doubt that, if these texts are accepted as the basis of
negotiations, developing countries will fight very hard to ensure that
they are improved. However, as one negotiator commented,
recognizing the political constraints of the South in any
negotiations with the major powers, “The US/EC framework is
biased against us from the beginning. We can try to improve them,
but they cannot be entirely improved upon.”

African and other developing countries’ negotiators, now blamed for
Cancun’s collapse, are being told by the major powers that their
agreement to use this biased Derbez text as the basis of
negotiations is one way to demonstrate their willingness to be
constructive.

Similarly, despite over 90 countries insisting on not commencing
negotiations on the Singapore issues in Cancun, del Castillo is
ignoring their public statements. In Geneva, he is now proposing
that the clarification process continues for investment and
competition, with a view to eventual negotiations, and that
negotiations take place in transparency in government procurement
and trade facilitation.

CIVIL SOCIETY STRATEGIES: KEEPING THE TRAIN OFF THE
TRACKS
From the outset, it should be noted that the WTO is beyond
reform. This is not an ideological argument, but an empirical
observation. If there is doubt, one need only ask if any changes
have been made since its formation which have benefited the
developing world.

Developing country negotiators, trade unions, social movements
and NGOs have worked very hard since the WTO’s inception to
improve upon its inequitable rules. However, the rules have not
been changed to their benefit in even minuscule ways. This is true
in all areas – agriculture, TRIPS and Public Health, implementation
issues, the Framework agreement on Special and Differential
Treatment, GATS. Even in institutional reform (democracy and
transparency issues) where developing countries made a concerted
effort post-Doha, nothing has changed. If anything, the anti-
democratic processes have merely become more sophisticated. In
not a single set of negotiations within this WTO multilateral
system, have developing countries come out as the beneficiaries.
Instead, the developing countries are forced into the corner of
damage limitation. We should have no illusions about the current
negotiations either.

Even though developing country coalitions are now able to pull
some weight and are set to become significant and permanent
partners at the negotiating table, they will remain politically less
powerful and their ability to chart the institution’s agenda and
direction will be limited.

SEVEN STRATEGIES FOR KEEPING THE TRAIN OFF THE
TRACK
What then should our strategies be? In the short term, the next
WTO ministerial in Hong Kong (end 2004 or early 2005) will be a
crunch point. Either the train remains derailed or, given the
aggressive US-EU counter-attack, arm-twisting, and bullying, it
gets back on track and charges ahead with a renewed force.

The following are some suggestions on how to keep the train off-
track:

1) Keep the EU Member States Split on the Singapore Issues,
Developing Countries Should Insist on Dropping them from the
Doha Mandate and WTO

European civil society groups did a signal service before Cancun by
lobbying the various member states to drop the ‘new issues’. As a
result, EU member states are now split. Such splits should be
reinforced, so as to make the European Commission’s position as
negotiator on behalf of the member states as difficult as possible.

Developing countries should insist on dropping the Singapore
issues from the Doha Development Agenda and from the WTO
since there was no explicit consensus to launch any of the
negotiations at the Fifth Ministerial, as instructed in the Doha
Declaration. Legally, it can be argued that the Doha mandate is
now over. (See South Centre Informal Background note, ‘The Post-
Cancun Legal Status of Singapore Issues in the WTO’, draft, 4
November 2003.) The working groups on the new issues -
Investment, Competition, Transparency in Government
Procurement, as well as the Special Session of the Good Council
dealing with Trade Facilitation- should cease to exist.

2) Insist on Halting Agriculture Negotiations Until there is an End to
Export Dumping
Civil society groups, particularly in the EU and US should insist
that their governments halt agriculture negotiations until such time
direct or indirect subsidies contributing to export dumping have
been eliminated. Whilst small farmers in the North also require
support, it is important that this support does not contribute to
dumping. The Common Agricultural Policy (CAP) for instance,
should delineate between products for domestic production vs.
export production. Subsidies must not be allowed for those
products aimed at the export market.

3) Cotton Initiative
It is important that this initiative is continued, and on a separate
track from the more general agriculture negotiations. This issue
was a likely cause of the Cancun collapse. The two areas where
the US and the EC do not want to tread, and therefore where
pressure should be exerted, are: i) ensuring the elimination of
subsidies in cotton and ii) providing financial compensation for the
injuries caused. Both Brussels and Washington are fearful that
compensating the West Africans would set a precedent in the
WTO for financial compensation in other sectors.

4) Non-agriculture Market Access Negotiations (NAMA)
Support developing countries in their resistance to drastic
liberalization of the industrial sector. More studies on the impact of
liberalization and deindustrialization in the South should be carried
out before negotiations recommence.

5) Oppose Strengthening the Secretariat and Director General’s
Powers, Insist on Democracy and Transparency
Whilst the European trade commission Lamy had said that the
WTO is “medieval”, his real intention is to make it Stone Age so
that the process of decision-making is one where the positions of
developed countries will carry the day. Amongst other reforms, the
EC is proposing looking into increasing funding for the Secretariat
and strengthening the powers of the Director General (DG). Both
these items are highly dangerous.

The 500-strong WTO secretariat staff has a track record of pushing
the agenda of the major powers. The secretariat, rather than
chairpersons, is responsible for drafting language for negotiating
texts which invariably emerge counter to the interests of developing
countries. Similarly, the suggestion to strengthen the role of the
director general should not be taken up. The director general’s
position must remain one of neutrality and the DG should not be
engaged in the negotiations. A strengthened role may legitimize
the DG taking positions in the negotiations, which should not be
the case. Even though the current DG is chair of the Trade
Negotiations Committee, his position should be confined to
facilitating negotiations between members, not directing
negotiations at his discretion.

6) Keep the Developing Country Coalitions Together
Civil society groups should rally behind the coalitions that exist as
a political counter-weight to the US-EU alliance. The bullying of
individual countries should be made public. At the national level,
groups on the ground should support and even put pressure on
their governments to play an active role in these coalitions. This is
necessary given the concerted and explicit maneuvers by the US
and EU to break the G-20 as well as the Alliance/G-70 (ACP,
African Union and LDCs). In Brazil for example, splits have been
detected between the Ministry of Agriculture and the Ministry of
Foreign Affairs, with the Agriculture Minister accusing Foreign
Minister Celso Amorin, who led the G-20 in Cancun, of lining up
with countries like India which is perceived as wanting to protect its
agricultural sector.

How strongly the G-20 and Alliance hold together will be the
determining factor of the outcome of the Hong Kong Ministerial.

7) Medium to Long Term: Towards More Equitable Trading
Arrangements
In the long term, civil society groups should look toward
alternatives beyond the WTO and the current bilateral free trade
agreements, both of which are based on putting corporate interests
before people or development. The trading arrangements of the
future  - perhaps built more upon South-South cooperation and
partnerships with others of more equal political standing -- should
put people and ecology as the central concerns.

* Aileen Kwa is a trade analyst with Focus on the Global South.
She is based in Geneva.

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