Euro-Latin American Parliamentary Assembly Assemblée Parlementaire Euro-Latino Américaine Asamblea Parlamentaria Euro-Latinoamericana Assembleia ParlamentarEuro-Latino-Americana EURO-LATIN AMERICAN PARLIAMTARY ASSEMBLY Committee for Economic, Financial and Commercial Affairs 30.9.2008 WORKING DOCUMT on the Reform of the WTO LA co-rapporteur: Ivonne Baki (Parlandino) DT\745181.doc AP100.364v01-00 External Translation
THE WORLD TRADE ORGANISATION, TIME FOR REFORMS? For the last few decades international trade has multiplied: the current volume of international trade is 14 times greater than the level recorded in 1950. This is partly due to the negotiations that have taken place in the World Trade Organisation (WTO), and its predecessor, the GATT (General Agreement on Tariffs and Trade), thanks to which international trade has gradually been liberalised. However, globalisation, determined by the processes of economic liberalisation and integration of the markets, has not benefited all countries equally, as was intended when the GATT was created. On the contrary, in some cases it has contributed to widening the gap between North and South, a distinction that, aside from its geographical meaning is a socioeconomic and political division: it considers that the countries of the North are those that have achieved a high level of socio-economic development, while the countries of the South are those that are below that level, because they have not achieved complete industrialisation (this is the case of the schools of thought that consider underdevelopment to be a process) or because that is their permanent state. It could be said that North-South dualism is a legacy from the colonial world, in which the countries that were under European control produced the raw materials that the European metropolises needed. Despite the attempts that have been made since the end of colonialism to make international trade a source of income for all those participating in it, it does not benefit everyone equally. The phenomenon of globalisation is therefore not synonymous with development and wealth for everyone. For example, in Latin America, the region where the most progress has been made in the reform process, growth in the 1990s was only 3.2% per year, which is significantly lower than that recorded between the 1950s and 1970s (5.5% per year). The difficulty in economic relations between the North and the South is that, although there are no longer the rigid rules of exploitation of the colonial era, the reality is very far from being an equal exchange. The international division of work, as it is today, continues to be one whereby the majority of the countries of the South supply low-cost raw materials for the countries of the North; according to UNCTAD, [in 2002] the economies of 80 of the 147 developing countries are more than 50% dependent on the raw materials that they export to the North. In this respect, the WTO is not fulfilling its main objective of reducing obstacles to trade and thus helping producers of goods and services and exporters and importers from all the member countries to move forward with their activities. This picture reflects some facts that are worth pointing out. Firstly, it is important to consider that, as a result of the international division of trade, the majority of the products that the countries of the South export to the North are raw materials. This means that it is in the factories of industrialised countries that the raw materials are processed into finished products with greater added value, which gives them a much greater mark-up than the producers receive. In the majority of cases, the added value AP100.364v01-00 2/6 DT\745181.doc
gained from the processed products remains in the hands of those who have the means to process the raw materials, and not in the hands of the producers, who do not have such means. Secondly, even with the delocalisation processes that have taken place in recent years, through which multinational and transnational firms are transferring factories from their countries of origin to countries where they find cheap labour, it is still those firms that benefit from the vast majority of the gain, as they pay their employees the local salary, thus promoting social dumping 1. Thirdly, the chain of trade is also dominated by large multinational and transnational firms from developed countries, thus marginalising the small producers that do not have the means to compete with them. This is clearly reflected in international trade, which is dominated by three regional blocks: the European Union, the countries of the North American Free Trade Agreement (NAFTA) and those of East Asia. The importance of this triad, which controls just over 75% of global trade, has been growing in the last two decades. The volume of international trade has increased, but this increase has mainly been between the countries of the triad, thus marginalising the small countries that are outside it and increasing the gulf between rich and poor. Doha: The last opportunity before failure? The Doha Development Agenda, which was launched by the Trade Ministers of the WTO member countries in Doha, Qatar, in November 2001, is part of the Doha Round, negotiations aimed at liberalising global trade and completing a matter that was not fully dealt with at the Uruguay Round: trade in agriculture. In Doha 2013 was set as the final deadline for completely eliminating subsidies for agricultural exports, and a strong reduction in internal subsidies was advocated, in proportion with the concessions for trade in industrial goods that developing countries have to make. In this respect, it is important to remember that the main criticism of policies that maintain internal prices or subsidise production in some other way is that they stimulate excess production, thus curbing imports or giving rise to export subsidies and sales at dumping prices in global markets. These and other structural problems have come to light in the recent meetings of the WTO, especially at the Ministerial Conference that took place in Cancun, Mexico in 2003, where the developing countries, grouped together in the Non-Aligned Movement (NAM), and led by Brazil, China and India, blocked the WTO s decisions: they considered that the more powerful countries such as the United States, the Member States of the European Union and Japan, were not committed to free trade since they subsidise agricultural production and production of raw materials, which are precisely the products that are coming from the markets in developing countries. In this way the developing countries expressed their concern for the persistent poverty and economic differences between North and South, the obstacles to the market, 1 Social dumping is the name given to exports at artificially low prices that are obtained through workers with very low salaries or slave labour, child labour, prisoner labour, etc. DT\745181.doc 3/6 AP100.364v01-00
capital and technology, and the insufficient capacities. They thus demanded a fair international economic order and measures to ensure that developing countries benefit from globalisation and participate fully and effectively in the decision-making processes on global economic affairs. It is also important to take into account that the Doha Round is not just seeking opportunities to integrate the less developed countries into trade in the developing world with favourable tariff conditions. The current economic climate is showing an economic slowdown in the three large global economies: the United States, the European Union and Japan. In addition, all over the world there is an inflationist trend, largely reflected in the high global prices of commodities and food, which is even more indicative of the level of interdependence of the global economy. This context once again shows how important the WTO could become as a factor for economic stabilisation in times of turbulence and for stimulating economic growth, which is what we have been talking about repeatedly. The crucial point that we are extremely concerned about today is the high level of protectionism in developed countries, for example in the agricultural sector, and at the same time the permissiveness of the WTO in the face of the high level of policies restricting production in the developing world, which ultimately means depriving it of the opportunity for faster integration into the free trade system. Establishing an action plan for democratising the WTO s decision-making process could be a colossal task, as the majority of the member countries, which are the developing economies, do not have sufficient clout within this international organisation and, shamefully, the dominant group has not had the necessary political will to encourage a change in the rules that govern the organisation of the WTO. This is why our integrated parliaments that are meeting together need to speak with one voice and emphatically propose that the negotiations of the Doha Round be resumed, based on the achievements made at the previous negotiating tables, and in particular call for flexibility from the powers that are part of the decision-making triad. The majority of civil society certainly does not have the collective conscience to enable it to understand the magnitude of the negative situations that could arise if the Doha Round fails. However, even if we accept that fighting for this cause may not make us very popular with the voters, we have a huge responsibility to our people to defend the causes that gave rise to the negotiations that led to the Doha Ministerial Declaration, because for dozens of countries it is nothing more and nothing less than the gateway to development and to opportunities for sustainable social progress, etc. Finally, it is the less advanced countries from an economic perspective that would have more to lose if we let these international negotiations go adrift. We urge the international community to continue with the efforts that began in the Doha Round in 2001 and we invite the leaders of China, India and Brazil, the developing countries with the greatest clout in the international free market, to take the lead again and achieve the goals put forward, which is also a step further towards achieving the Millennium AP100.364v01-00 4/6 DT\745181.doc
Goals proposed by the United Nations. In addition, many people believe that the Organisation s problem lies in its decisionmaking process: although the Organisation appears to be a group in which all of the members have the same decision-making powers, the reality seems to be very different. Decision making in the WTO. Time for reforms? Is it time to think about reforms in the WTO? The vast majority of the members of this body that controls international trade have been asking this question following the resounding collapse of the Doha Development Round, whose last ministerial summit held in Geneva in July dashed the last hope of the developing world breaking their way into the more advanced markets, represented in particular by the United States, the European Union and Japan. Our discontent and concern about the results achieved since the first Ministerial Meeting in 2001 are evident, and we therefore want to set out today the reasons why we are insisting that the WTO makes serious reforms to the way in which it conducts its policies and makes decisions. It is important to clarify the great respect that the Euro-Latin American Parliamentary Assembly (EuroLat) has for the WTO: we believe that this multilateral body is the ideal entity to represent security, transparency and stability in international trade, especially in times like these when the common pattern for trade is globalisation in the context of the free market. EuroLat applauds the multilateral rules and disciplines, whose purpose is to solve trade disputes between members. Give our appreciation and respect for the WTO, we urge the international community to examine as a whole how to use our capacities in order to strengthen the Organisation. The scant results achieved in recent years undoubtedly reflect clearly the fact that only a select group of participants has overall decision-making power in the WTO and that using international trade to achieve the ambitious goal of boosting the development of those economies that are lagging furthest behind and are at the greatest disadvantage will be a utopia unless there is a more democratic decision-making structure within the WTO. Even though decisions are officially made in the Organisation based on the principle of one country, one vote, and by consensus, the truth is that many developing countries have, in practice, been restricted from participating fully. Some developing countries do not even have a delegation in Geneva; other delegations have very few staff and sometimes do not have the capacity to keep abreast of the discussions and negotiations, and are not therefore able to influence the measures that are adopted. This small number of leaders may also have to attend meetings of United Nations agencies and will often miss the WTO meetings taking place at the same time. The General Council, which is made up of diplomats from the member countries with offices in Geneva or delegates from the subsidiary bodies that report to it (for example, the Agriculture Committee or the Council for Trade-Related Aspects of Intellectual Property (TRIPS Council)) are responsible for making the decisions. The most important decisions are adopted or approved at the negotiating rounds that the finance ministers of the member DT\745181.doc 5/6 AP100.364v01-00
countries conduct at the Ministerial Conference, which is normally held every two years. AP100.364v01-00 6/6 DT\745181.doc