South Asia Watch on Trade, Economics & Environment (SAWTEE)

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UNCTAD XI: window of opportunity
Published: The Kathmandu Post, 11 June 2004
By: Ratnakar Adhikari

The history repeats by itself. The Tenth Session of the United Nations Conference on Trade and Development (UNCTAD X) was held in Bangkok in February 2000 under the shadow of the collapsed Seattle Ministerial Conference of the World Trade Organisation (WTO). Four years on, UNCTAD XI is being organised in Sao Paulo from 13 – 18 June 2004 under the similar circumstance. With the failure of the Cancun Ministerial to take forward the Doha Development Agenda (DDA) agreed in November 2001 by the 142 member countries of the WTO, the focus of the international community has shifted to UNCTAD XI.

Though UNCTAD is not a negotiating forum on trade policy issues, its role in providing research, advisory and capacity building support to the developing countries on these issues cannot be underestimated. The theme of UNCTAD XI is “Enhancing the coherence between national development strategies and global economic process towards economic growth and development, particularly of developing countries.” Out of the four sub-themes of the conference, namely development strategies, building productive capacity, assuring development gains from trade and developing a global partnership, this column focus on the third one with South Asian perspective.

As identified in the DDA, the Monterrey Consensus and General Assembly Resolution 58/197 on International Trade and Development, there are a number of issues that are of particular concern to South Asian economies. However, this column will focus only on six major issues, which should be taken up by the South Asian countries during UNCTAD XI in a concerted manner.

The first one relates to trade barriers, trade-distorting subsidies and other trade-distorting measures, particularly in sectors of special export interests to developing countries, including agriculture. Given the fact that the major exports of South Asia to the developed countries market are textile and agriculture, it is disappointing to note that there still exist tariff peaks (unusually high tariffs) on the export of these products. While the key to reform in international trade hinges upon the liberalisation of the agricultural sector, which is regarded by the developed countries as a sacred cow, the pernicious trade barriers on other products of export interests to the South Asian countries need to be removed in order to help this poorest region in the world (in terms of absolute number of poor people) reap the benefits from the international trading system.

Secondly, as if tariff and subsidies were not enough to protect the agriculture and sun sent industries in the North, developed countries have now started using a host of non-tariff barriers, especially in the form of technical barriers and sanitary and phytosanitary measures. While the WTO allows each sovereign country to maintain certain standards for the products to be imported into their territories in order to protect plant, animal and human health and protect their consumers from deception, it obliges member countries to follow internationally accepted standards. Developed countries have an added responsibility to ensure that such standards are not onerous for the developing countries to fulfill. However, the catch is that the WTO member countries can impose a higher standard than agreed internationally if they feel that there is a scientific justification to do so. It is disturbing to note that the developed countries have made this “exception” the rule and been using these measures to protect their domestic agriculture and “sun set” industries. Therefore, South Asian countries should, among other, push for greater compliance with the international standards and binding provision for providing technical assistance to help developing countries enhance the capacity of their standard related institutions.

A third issue deserving special attention of all the South Asian countries is that of liberalisation of mode 4 (movement of natural persons) under the General Agreement on Trade in Services (GATS) for the delivery of services. While the developed countries have managed to include a provision of moment on capital (mode 3) within the GATS and have pushed the developing countries, especially the ones which have recently acceded to the WTO, to make liberal commitments on this mode, they have been stingy on liberalisation of mode 4. This is despite the fact that as per the Global Economic Prospects 2004 produced by their most-favoured bank (the World Bank), if the developed countries liberalised this mode of service supply, a total welfare gain in excess of US$ 300 billion would accrue to the world.

A fourth issue to pursue at UNCTAD XI with utmost priority by the South Asia region, which is rich in biological diversity and traditional knowledge, relates to bringing about balance between the obligations of the member countries of the WTO to provide patent on ‘life form’ under the Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS) with the provisions of prior informed consent and access and benefit sharing of the Convention on Biological Diversity (CBD). To the utter dismay of the developing countries, despite the recognition of this need by the DDA, no breakthrough has been achieved in this area.

A fifth issue relates to the need for special and differential treatment (S&DT) provisions for developing countries in trade agreements to be made more precise, effective and operational. Despite the commitments made at Doha, the developed countries are hell bent on docking this issue once and for all. However, developing countries in general and South Asian countries in particular shall do well not only to keep this issue alive but also to link it to other issues currently being negotiated at the WTO.

Finally, there is a need to achieve expeditious and appropriate resolution of outstanding implementation-related issues and concerns. Due to the pressure from developing countries in general and India in particular, the Doha Ministerial came out with a separate declaration on the Implementation Related Issues and Concerns. This declaration included not only those provisions of the WTO, which could not be implemented by the developing countries because of their lack of capacity and resources, but also those provisions which were not implemented by the developed countries despite the required capacity and resources. Like S&DT provisions, developed countries are in a mood to dump these issues. Developing countries in general and South Asian countries in particular should play their cards well to ensure that the commitments made at Doha are implemented.

UNCTAD XI does offer a window of opportunity, among others, to make the global trading system more fair, transparent, predictable and equitable. However, looking at the current state of draft text to be adopted at UNCTAD XI, there appears considerable divergence of views among the developing countries and developed countries on how to move forward.

Given this reality, if the South Asian countries put forward their concerted opinions on key issues mentioned above and align themselves with a formidable alliance, namely Group of 77 (G-77), they could possibly better influence the negotiations in the broader interest of the developing countries than if they acted individually.

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