The WTO in Hong Kong: Another victory for the Multinationals
By Dave Timms, February 2006
The World Trade Organisation ministerial meeting held in Hong Kong in December saw a whole series of protests, both by NGOs on the inside and Asian farmers' organisations on the outside, with the Korean Peasants League playing a particularly strong role. Yet despite all this, the meeting ended with exactly the bad deal for developing countries that trade activists had warned against.
Banner at the WTO protests in Hong Kong, posted on indymedia.org.uk
Speaking as the talks ended, the World Development Movement's Head of Policy, Peter Hardstaff said: "At its most basic the deal done in Hong Kong sees developing countries massively open up their markets in services and industrial goods in return for minor cuts in agricultural subsidies by the EU and US. They have traded off some short term gains in agriculture in exchange for the long term loss of economic sovereignty and the forced opening-up of their markets. This is a deal for multinational companies, not for the world's poor."
The EU, aided by the WTO secretariat, succeeded in forcing through proposals to ratchet up the pressure on developing countries to offer up essential services such as water and transport for liberalisation by obliging them to enter negotiations to liberalise a sector if a group of countries ask them to. The final agreement also sets out criteria for the level and type of liberalisation that can be demanded by developed countries in negotiations. This includes the elimination of key tools to regulate foreign multinationals such as economic needs tests (say, to ensure local employment).
In the final weeks before Hong Kong it became clear that there were still massive divisions between rich and poor countries on all the major issues and there was an increasing likelihood that the talks in Hong Kong might collapse. To avoid this and remove some of the pressure there was much talk of scaling down ambitions for the Ministerial meeting.
The trade in services was particularly controversial. Despite massive opposition, the EU's aggressive proposals to deepen and accelerate service liberalisation negotiations formed the basis of the draft Ministerial declaration in this area. At the time Martin Khor of the Third World Network said: "This unfair and unbalanced treatment of the services issue is the biggest flaw of the text. If not resolved before Hong Kong, it may well be the most contentious problem in Hong Kong, and threaten to derail the process there."
In the final hours of the Hong Kong meeting, a deal on the EU budget in Brussels meant Peter Mandelson was able to offer to end EU export subsidies by 2013. This received massive attention from the world's media and put India and Brazil, who had effectively backed themselves into a corner by saying they would make concessions on services and industrial tariffs if the EU went further in agriculture, on the back foot.
The issue of export subsides had been blown out of all proportion to its benefits, partly because it became inextricably linked to the row between EU member states over the size of the EU budget. Export subsidies are tiny compared to domestic agrciltural subsdies which were left almost untouched by the Hong Kong talks. In 2004 EU export subsides were 3bn Euros while total EU agricultural subsidies amounted to over 58 billion Euros.
Negotiations on trade in industrial and manufactured goods (Non Agricultural Market Access - NAMA) produced a dangerous agreement to implement a radical formula that will disproportionately cut the higher tariffs or import taxes used by developing countries to protect infant industries. These tariffs are necessary to stop industrial goods from richer countries flooding poor countries' markets and to raise much needed government revenue. Developing countries are concerned that his could lead to the sort of deindustrialisation and unemployment seen in Africa in the 1980s and 90s after the International Monetary Fund (IMF) and World Bank forced countries to slash tariffs as a condition of loans.
Discussion of the dozens of proposals that developing countries have put forward to correct the problems with implementing existing WTO agreements have effectively been put off indefinitely, with little hope of agreement in this current round of talks. The same is true for the promises of "Special and Differential Treatment" for poor countries. Insult was added to injury in Hong Kong when the EU, represented by European Trade Commissioner Peter Mandelson, handpicked a few particular proposals which it dubbed a "Development Package" and offered them as a carrot to the poorest nations.
The least developed countries (LDCs) have been promised that taxes and quotas on their goods entering developed country markets will be removed (known as Duty Free and Quota Free market access). However the deal allows rich nations to retain taxes and quotas on 3 per cent of goods. This loophole could be used to block access for key LDC exports such as textiles from Bangladesh.
The divide and rule tactics of the rich countries, some poor negotiating strategy by some large developing counties and the blatant stitch-up of the services negotiations were compounded by the undemocratic and deeply iniquitous process of trade negotiations themselves. Since taking office as Director General, Pascal Lamy, has done nothing to halt the secretive practice of 'Green Room' meetings, despite his describing the way the WTO operates as "medieval" when he was European Trade Commissioner. These exclusive invitation-only negotiating meetings are where the real negotiations take place between the big players during WTO Ministerials. Green Rooms, which typically include 20 to 30 countries, have no status but they are so crucial that even being invited to attend the Green Room in Hong Kong was described by a Kenyan official as "a triumph". On one occasion during the ministerial, questioned about their timings, the WTO spokesman responded cryptically: "If the Green Room exists, it will be held at that time".
From these non-meetings new texts emerged which, having been agreed by the main players, were hard to challenge. This untransparent process was compounded by the massive inequality in negotiating strength between rich and poor countries. WDM calculated that the EU had an extraordinary 832 people on its delegation in Hong Kong. The USA had 356 on its team (up from 212 in Cancun) while Japan had 229. At the other end of the scale 46 countries had less than 10 delegates. These included Bolivia with seven delegates, Chad with 8 and the Gambia had just 2. The Central African Republic had no delegates at all.
An estimated 450 negotiating meetings took place during the Hong Kong Ministerial. No details, invitations or list of attendees exist and no minutes will ever be produced. For small delegations, even if they were invited to the secret meetings, found it practically impossible to participate in them. Rich countries field vast teams of lawyers, experts and negotiators to make sure they get the result they want. A small country with only two or three delegates can not hope to get there voice heard.
When trade negotiations recommenced in January at the WTO's Geneva HQ, Ambassadors from member states took over from the various Ministers who led the talks in Hong Kong. They face a frantic year if talks are to meet their original deadline of being finished and signed by the end of 2006 (the deadline imposed by the fact that the US Government loses the trade negotiating authority granted to it by Congress, early in 2007). This breakneck timetable means we can expect two full WTO Ministerial Meetings this year. The first, being called 'Hong Kong II' in the absence of a firm venue and to indicate that it is meant to wrap up the unfinished business from December's Ministerial meeting, will take place in the first quarter of the year. A 'final' Ministerial will happen at the end of 2006.
If countries in the global South are ever to get a fair deal on trade, we need to demand a radical shift in the trade policies of the UK Government and the EU. These continue to be based on the demands of multinational corporations for access to new markets and restricting the ability of developing countries to regulate their activities, not on the needs of those countries or poor communities.
Dave Timms is a campaigner with the World Development Movement.