 |
|
|
 |
| home > wto news > 2000 news > news item |
|
WTO
NEWS: 2000 NEWS ITEMS 6
November 2000 The WTO—World Bank on-line forum on Trade and Sustainable Development attracted the participation of over 1,100 individuals from around the world during the first two weeks of discussions. |
|
 Summary of discussion
1. Poverty, Inequality and WTO Q:
From: uzairahson@soon.com A
from L Alan Winters of the University of Sussex: By helping to provide encouraging and stable conditions for international trade, the WTO contributes to the creation of wealth and income. Unless governments actively expropriate the disadvantaged, at least some of this will flow through to the poor in their countries despite starting off with unattractive distributive shares. The evidence suggests that, ON AVERAGE, the poor do as well from economic growth as everybody else, including growth stimulated by international trade liberalisation and openness. As growth occurs it will eventually become evident in these countries that excluding a large share of the population from active and enthusiastic participation in the economy has major costs in terms of output and income foregone. Also by encouraging trading relations, and hence contact, between countries, the WTO helps governments and people in developing countries see the benefits accruing to countries where distribution encourages everyone to participate fully in economic activity. Q from dante sioli from Brasil on “The problem is our internal policies” dante_sioli@hotmail.com. A
from prof. Winters, Sussex University The importance of domestic policies in reaping and sharing the benefits of international trade is illustrated by the section of my paper for the WTO on trade policy and poverty — see the WTO Home page. I
discuss a contrast between Zambia and Zimbabwe in terms
of marketing Q from Sai Yvst on trade liberalisation and poverty in India A from prof Winters: I think your question is a very good one. I share your concern about the poor in India and agree that it is a general human responsibility to try to eliminate such poverty. Unfortunately, however, wishing something does not make it happen, and we have to be hard-headed (not hard-hearted) about the way that societies and economies work. I do not believe that there is any WTO rule that requires, or even encourages, governments to dismantle support structures. In the case of quotas, while it may be the case that some small scale firms gain from them, the majority of the rents that they create are appropriated by the larger — non-poor — players. If the government were prepared to support the poor through quotas, why are they not prepared to do so by more efficient means? Nothing in the WTO prevents governments from pursuing pro-poor distributive policies if they wish. Implicitly you ask 'Why does the WTO deal with subsidies but not domestic distribution?' Production subsidies are concerned mainly with economic efficiency; they have quite clear spillovers between countries and there is a danger that if they were uncontrolled governments would get into costly subsidy competitions, with each other trying give their firms an advantage on world markets. As such, they are the natural sphere for an international agreement between countries. Internal distribution policies, on the other hand, are less closely linked to efficiency, have no international spillovers and quite clearly lie at the very heart of the domestic political sphere. You and I might wish an international organisation to instruct our government to do what we want them to do, but remember that these actions might not suit the rest of our peoples and the organisation might actually seek to impose policies that we dislike. In other words, it makes perfect sense to have bodies which can address some of the difficulties that might arise in international trade without having to solve such fundamental issues as distributive justice. Besides, we have bodies which are prepared to deal with distributive issues broadly defined — e.g. the UN and UNDP. 2. Technical standards and poverty Q
From: bionic4@hotmail.com
A from Prof. Rolf Langhammer from the Kiel Institute of World Economics, Kiel/Germany. My speciality is trade and development. In response to the question from bionic4@hotmail.com ( student unidentified) I would like to say that I understand the question in the sense that the student sees quality standards as a protectionist device abused by developed member countries. In my view, the national treatment rule offers sufficient ways and means for developing countries to invoke a dispute settlement mechanism procedure if quality standards hinder developing country suppliers from finding access to developed countries' markets. Trading companies in developed countries and export-oriented foreign investors in developing countries will be strong allies for developing countries to identify violation of the national treatment rule in developed countries. In addition, any attempt of vested interests in developed countries to label products produced under different PPMs (process and production methods) as “non-like” products and therefore open to discrimination against domestically produced goods has been rejected up to now. In this respect, I am optimistic that technical standards do not act as the major barrier to market access. Q from Alejandra Herranz, Argentina on What can companies and civil society do to show to the entire world that trade and sustainable development are not necessarily at odds? A
from Prof Rolf Langhammer Kiel Institute
of World Economics, Kiel Germany Sustainable development
requires changes in preferences of people (lowering their
time preference rate in terms of taking future actions
and developments more into consideration than hitherto).
Trade helps people to raise their income, especially
those of the poor in developing countries who otherwise
would be limited to narrow domestic markets when
marketing their productive capacities. Rising income
changes production structures in favour of
environment-saving techniques and shifts preference
structures to more environment-saving goods (and
services). This so-called composition effect is crucial
for sustainable development in the medium term. In the
short run, negative externalities of using the
environment as a “sink” because of rising
economic activities should be internalised through
correct pricing of the environment ( i.e. by auctioning
waste emission certificates). In case of uncertainty
about future effects of using the environment now
(biodiversity), option values could be used to come to
reasonable cost-benefits analyses for A
from prof. P. Dasgupta from the
Adminitrative Staff College of India, in Hyderabad. This
is a response to the question asked by bionic4@hotmail.com
on Technical standards and poverty Quality standards
often create an unneccessary barrier to trade because
they vary from country to country. If arbitrarily set
they are likely to be used as a means of protectionism.
In the recent years, developing countries' trade have
been severely affected by the use of quality standards as
nontariff barriers to trade particularly by developed
countries. The Agreement on Technical Barriers to Trade
tries to ensure that regulations, standards, testing etc,
do not create an unneccessary barrier to trade. While on
the one hand, it encourages countries to adopt However there is a need to make information on standards available to manufacturers and exporters in different countries. At present such information is not easily available and this is a problem for developing countries. Also, mutual recognition of standards is not extended to most developing countries. A from professor Pier Carlo Padoan, teaching at the University of Rome Italy “and the College of Europe in Bruges, Belgium. In
answer to the question by Knhur Carrasquel on Technical
standards and As
for the question about precautionary principle and market
access, the A
from Philip English on : SPS Agreement:
World Bank research I am an economist running the World
Bank Institute's training and capacity-building program
in trade policy. I have responded directly to the In a nutshell, there is serious cause for concern that SPS and other standards may be the new form of protectionism used by the North to block some Southern imports and, through our research and dissemination, we are trying to confront the issue and assist the South to defend their interests. A from prof. Padoan to Yanneth Adriana Lopez Camarillo on how the problems related to technology transfer were solved in different countries. Technology transfers in Italy take place in several forms including the acquisition of patents, inward FDI, and joint ventures between home and foreign companies The key issue is that to acquire technology from abroad a developing country must adapt the new technology to local needs, This implies some form of (process) innovation in the receiving country. To this end what is crucial is domestic skill, local human capital. Old technologies are usually sold in secondary markets to developing countries and they do not contribute much to the upgrading of the local economy. A real upgrading requires high local skills that are able to select state of the art technologies abroad. One important vehicle of diffusion is joint ventures between domestic and foreign firms which should be allowed to enter the local market in exchange for new and not obsolete technologies. Also agreements between local and foreign research centers and universities are certainly very helpful. 3. WTO and LDCs and why Developing Countries should participate in a new round Q: What is the interest of LDCs (least-developed countries) in the WTO? from Stephan a. Neu, adviser to the high commissioner of human rights and poverty reduction, Mauritania, on behalf of gtz (german aid)
A.
from Mr C. Osakwe, Head of the WTO
Working Group on LDCs ii) There are restrictions in agricultural trade (as in many other sectors), but agriculture is not excluded from liberalization negotiations. Currently, the mandated negotiations in agriculture and services are underway. Recognition should also be accorded to the progress that has been made. Before the Uruguay Round of Multilateral Trade Negotiations, agriculture was not part of the liberalization agenda and was not subject to the disciplines and rules of the trading system. Today, it is. There are problems and challenges, but liberalization negotiations are underway. It is correct to say that the greater the liberalization of the agricultural sector and sectors, the higher the gains that will accrue to all countries through increased incomes, particularly developing countries, including the Least-Developed amongst them; iii) The advantages of membership in the multilateral trading system exists in the system of rules and disciplines. Adherence to a rules-based system is infinitely superior to a system where power prevails. The dispute settlement system which resolves disagreements or conflicts on the basis of the non-discriminatory provisions of MFN and National Treatment is the strength of the system. Although the system provides for preferences and flexibility in the rules, its real strength is in the system of legal contracts in which no member is above the law; iv)
Finally, it needs to be stressed, however, that
notwithstanding the benefits offered by the rules-based
system, the ability of LDCs (and indeed all countries) to
draw on these benefits depends on the extent to which the
domestic economy has undergone reforms to remove
structural Q From: Leodegardo M. Pruna, Why do developing countries need a new multilateral round? A from L Alan Winters of the University of Sussex I
think this is fairly straight forward, at least for the
majority of developing countries. A round may help developing countries to address governance issues in the WTO, about which they care. Personally
I do not think a comprehensive round is in the interests
of developing countries because they will be swamped by
it, but others argue that developing countries have
additional objectives, which may be A small point is that developing countries are beneficiaries of a rules based system. Even if they feel they sometimes do second best from the system, consider how much worse it would be if there were no rules at all. Activity in this main area of WTO competence helps to support the rules based system. A
from Cliff Stevenson, Rowe & Maw, 20
Black Friars Lane, London One answer would be access to WTO dispute settlement. India has successfully challenged WTO inconsistent anti-dumping duties applied against bed linen by the EC. Q: from Mara_Burr@deweyballantine.com My name is Mara Burr and I am an attorney in Washington, DC specilizing in international trade. There are a number of problems with the WTO — lack of meaningful public participation, lack of transparency, the inconsistent way in which panels and the Appellate Body have dealt with disputes, and the problem of balancing domestic environmental concerns/ measures with international trade obligations. The mandated review of the dispute settlement system did not result in agreement on how to improve or amend the current system. As a result of the failed dsu review, the problems that caused many groups to feel shut out of the system still exist. It seems clear that at least the “real parties in interest” whether those parties are the affected industry or non-governmental organizations should have access to the system (even if only as an observer). Are there on-going efforts to deal with these issues in a meaningful way? Can we expect any sort of agreement in the near future? A: My name is Errol P. Mendes. I am a professor of law at the University of Ottawa, Canada with a special teaching, research and consulting interest in globalization, trade and justice issues. I want to second Mara Burr's comments below and suggest a discussion thread. I
think that there is a major “democratic
deficit” challenge facing most multilateral
institutions and particularly the WTO and the Bretton
Woods Institutions. The WTO and the IMF are focused on
how to make the global However
there is a fundamental asymmetry in the global human
society which is creating grave dislocations and giving
rise to the demonstrations we saw in Seattle, Washington,
Prague and most recently at the G20 meeting in Montreal,
just a few miles from Ottawa. The asymmetry is the drive
towards total mobility of capital, goods and services in
the world trade and services regime, while for the most
part human capital around the world remains immobile.
This assymetry can and does give rise to the potential
for human exploitation on an ever increasing scale which
multilateral institutions must start to discuss and
propose remedies for. Such exploitation includes illegal
migration, child labour, economic exploitation and
discrimination against the female workforce, incentives
to disregard existing laws and regulations on health,
safety, other labour standard and the environment. I have
co-authored a book on the winners and losers in the
Global Economy titled Because the WTO has some semblance of “teeth” in the dispute settlement panels, those who are dissatisfied with the WTO will not accept the argument that these problems have to be dealt with by the ILO or the UN in general. Because the IMF has the power to bring “robber baron authoritarian rulers” to heel by the power of conditional loans as was the case recently with the Suharto regime in Indonesia, there will be an increasing cry for filling in the democratic deficit in this institution also. We
need to have a world wide discussion among experts and
non-experts A from Joe McMAhon, Professor of International Trade Law at the Queen's University of Belfast. In relation to the direct effect of the WTO within the EU, it must be pointed out that when the ECJ ruled on the direct effect of the GATT, they set down various conditions for direct which the GATT did not meet. However, on reflection those criteria are now met by the WTO, so surely it is just a matter of time before the ECJ rules that individuals can rely on WTO provisions before their national courts. However, the question is: is this the best mechanism to eradicate the democratic deficit of the WTO? Moreover, the contribution which this could make to the eradication of poverty is negligible. Mozambique My
almost superhuman effort only kept 3300 employed for 4
years. I lost the money I had made specifically to help
Mozambique plus US$1.5M borrowed in Europe and sent to
Mozambique, the banks there lost US$10M, I lost my wife
and became practically bankrupt. The 3300 will lose their
jobs soon. The combination between the Western World interests (Subsidies to western farmers, using Africa as a dumping ground for 2nd hand anything, plus using Africa as a target market for IMF industrial investments in Asia, to name the most devastating 3 issues) coupled with African Governments' Apathy is just a no-goer for black-africa, there is no chance whatsoever with the current cocktail. Premature and Indiscriminate-Goods Free Trade only helps maximize the return on investment of Asian industry at a human cost to Africa. If anyone is interested in knowing more, pls reply. I do realy, realy understand the problems first hand and I do know some of the answers. However I do not want to waste time explaining it all, if it is only for WTO-World-Bank-Academics, “let's be chums and show we care” forums. I'm sick of all the hipocrisy. Normally if one —as is my case— does not go along with the latest herd thinking, one is ostrachised. I await to see what happens here. Don't
forget, I have no chips on my shoulder: I'm white with a
black heart, I made my money in the most ruthless of
competitive western world capitalist society, I lost it
all “exploiting the blacks”, have been rich Kind regards and congratulations with the initiative. From: Frederico Magalhães fmagalhaes1@hotmail.com To:
WTO-WB Online Forum on Trade The
problem is not with the WTO, the problem is that the WTO
has an agenda to liberalise and, like in all human
negotiations, it pitches the “penetration”, for
lack of a better word, at a certain level assuming that
each country will try to defend its own interests
delaying or moulding that penetration as it best suites
its people. With Africa that does not work. A by prof Winters to Frederico Magalhaes. I think you have a very important insight about governments — they pursue their own interests. I see one of the major benefits of bodies like the WTO as being that they constrain the extent to which governments can manipulate their policies to favour particular groups over the general good. Trade restrictions redistribute income from consumers to producers and do so inefficiently. I
do not think that you really mean that the WTO should
decide who liberalises what and when. In fact, your
question seems to imply that an external body has already
done so and that you object to its decision. I do I do not know the second-hand clothes story for Mozambique, but let me make some general observations. You mention 80,000 jobs; how many people consume cheaper second-hand clothes? If the clothes are unhygienic, the WTO quite clearly permits the government to act against them. If consumers noticed that they were getting sick, why did they not go back to consuming local new clothes? Their incomes have grown since then, I believe. The tax-breaks for charitable giving in the USA do not affect US jobs; for American citizens the alternative to giving the clothes to a charity and claiming a tx relief is throwing them out. Their demand for new clothes is hardly affected at all. Moreover, even if it were, the Americans are big importers of clothing made by developing countries — often by very poor workers. It is clearly distressing when people lose their jobs, but the response is not to protect the old uncompetitive jobs indefinitely. There may be a case for sequencing liberalisation over, say, a couple of years to allow people to prepare, and for supporting the people who lose their jobs temporarily. But the real answer is to ensure that conditions exist in which people can find activities in which the have comparative advantage. [And before you object, there are always areas in which particular countries and citizens within those countries are RELATIVELY efficient.] These conditions include fair access to other markets — which the WTO helps to induce — and decent conditions for business (including very small business) at home — e.g. property rights, freedom from extortion, freedom from excessive regulation. Bangladesh
I would like to take this opportunity to address both the questions at one go since both these relate to same set of issues. The observation about widening rural-urban gap is not unique to India. Bangladesh has been proactively pursuing a policy of deregulation and liberalisation for over a decade now and our experience had been similar. Table 1: Percent of Population in Poverty in Bangladesh Year Rural
Urban Table
2: Recent Trends in Consumption Growth and
Inequality, 1991/92—1995/96 Source: Bangladesh: Promise and Performance (2000), (ed. Professor Rounaq Jahan), University Press Ltd., Dhaka, Bangladesh. Although there has been some (not very significant, marginal) decline in poverty level in the country over the corresponding period, three parallel developments are also significant: (a) GDP growth average about 4.8 percent over the decade of 1990s but inequity has also been on the rise, (b) the rural-urban gap in terms of people living under the poverty line has been on the increase and (c) percentage of people in the extreme poverty group has continued to remain more or less the same. Whilst some groups have indeed been able to take advantage of liberalisation, large segments of the population including female headed households, unskilled labourers, workers in import-substituting industries which are incurring increasing losses in the face of liberalisation, as also workers in the privatised industries who have been laid off are becoming increasingly vulnerable due to income erosion under a liberalised and decentralised regime. As public expenditures are brought down and coverage under safety nets become downsized, a fall in the living standards of some of the most vulnerable segments of the society is clearly discernible. It
is true that countries which are economically weak (and
of economic weakness the indicators presented by one of
the two discussants are valid, and common to many other
countries, perhaps even more so for the LDCs) are
handicapped from the very start as they participate in a
globalised trading regime. However, there are two issues
which should be taken under consideration. One, whether
from the perspective of developing countries (DCs) and
least developed countries (LDCs) the rule-based
multilateral trading regime that WTO proposes is better
than what it is attempting to replace, and two, whether
WTO system itself has an on-going mechanism to There
is clear evidence that a rule-based regime is more
preferable to a non-rule based one. However, it is
equally true that during negotiations in all the eight
GATT Rounds, more strongly so during the Uruguay Round, Thus
for many DCS and LDCs the risks remain real, the
opportunities only It
needs to be emphasised that a number of global
initiatives are now being taken to address some of the
more urgent issues related to trade capacity building in
the DCs and LDCs. The third LDC conference in Brussels to
be held in July 2001 provides a good opportunity to
articulate the specific problems of the LDC, stemming
from the process of globalisation. UNCTAD and others are
also trying to design effective policies to support
strengthened global integration of DCs and LDCs. WTO Brasil This
is in answer to the question from Luiz Marcelo L.azevedo@digi.com.br. Between
1990 and 1998 Brazilian GDP grew by 23% (IMF
International Financial Statistics Yearbook, 1999), which
shows that someone's incomes are growing, but I do not
have access to detailed data to say in which sectors.
While trade reforms typically bring some immediate growth
benefits, the big benefits take some years to kick in.
Provided that they keep up the reform process I would
expect growth to continue to improve. What about the poor? I do not have detailed data and so can not comment on whether poverty has increased or decreased. The evidence is strong that on average the poor benefit proportionately as much from growth and openness as does everyone else, so as growth continues the outlook on poverty should be optimistic. However, there clearly are cases where they the poor do not gain proportionately, and here redistributive policies are required. These need not necessarily be direct transfers, but setting up systems which allow the poor to address the reasons for their poverty — e.g. education, health, isolation from markets, etc. India Dear
Prof Langhammer, A from Prof. Rolf J. Langhammer, Kiel Institute of World Economics, Kiel/Germany In
responding on the Indian situation, I would like to draw
your attention to the October 1998 WTO Trade Policy
Review Report on India. The report acknowledges, as you
do, important reform steps in India toward more openness
initiated and implemented since 1991. Likewise, however,
the reports underlines the continued existence of many
distortions, i.e. the reform lag in the agricultural
sector which has remained relatively untouched by the
reform programme. For instance, “progress in
changing the agricultural incentives and subsidies is
likely to remain constrained by the Government's policy
of providing support prices to farmers and ensuring low
cost supplies to the population through the public
distribution system” (Report: xxvi). In short,
internal terms of trade still seem to work against
agriculture and pro industry thus giving incentives to
the poor to migrate from the rural to the urban areas. China
The village now called “Leidashi Village” is situated in the middle part of China. It has about 800 population, mainly in agricultural sector. The village was not that rich, but lived pretty well because of its relatively well fertilized land. In early 1960s, the Chinese government built a dam (reservoir) there, and the village was forced to move to upland (hills). There had been no real compensation for this relocation but the villagers were informed of when the water level would reach their door sill. Every year the villagers received certain amount of rice and clothes for winter time. Because of the then prevailing policy in China, the villagers were not allowed to do trade nor to own anything other than a simple house. Merchants were seriously penalized. No electricity, no bicycle, no car, no paved road. Everything remained natural. They ate what they fished: all fresh. They raised chickens and ate eggs and chickens. They raised pigs and other livestock and ate them. They sang and danced in their own way. They
did not think they lived in a miserable condition. Nobody
recognized In
the late 1970s, commerce returned. They sold eggs,
chickens, pigs, fish, and whatever they had, to the
nearby cities, such as Wuhan located Second, due to the demand from Japanese and American markets, it was suddenly found that silver fish (local name) there became precious. Organized fishing teams with government licenses used mechanized tools to harvest such fish before the villagers realized their values. After one harvest season when villagers began to learn of the value, silver fish suddenly disappeared from the reservoir. The organized fishing team did not profit much because of their expenses on mechanized tools, which became of no use. Third, one villager learned from the outside world to use modern techniques to raise chickens. After his initial investment, it turned out that the waste of the chicken farm polluted the water. He was forced to shut down and bore the loss. Nobody wanted to risk any more. In the 1990s, the popular effort was to go to nearby cities to do seasonal jobs, mainly in the knowledge-free construction sector. They went to live in the marginal areas of cities and worked hard, and brought back money to the villages. Some families could afford to build two-storied house. Since they were not mainstreamed into urban life or because of other reasons, they talked about urban life but nobody wanted to try to bring their village to a better condition. When I revisited there last year, I found everything remained exactly the same except for people: a new generation had emerged and they were following their fathers' footsteps to sustain the continuity of the human being. Commodities in trade remained the same: eggs, chickens, pigs. But nature-based fish became less available. Trade continued, and comparative advantages might be there. But it is hard to see that any of them has become richer because of comparative advantages. Trade
is necessary, but the precondition is that you have
something to trade. When trade begins, local people may
benefit from selling their natural resources and
associated products (if organized sector holds its
hands). As trade continues, the nature may become
exhausted. Local people can once show off what they have
just bought, but will for sure return whatever they are
used to be but with an exhausted mother nature. This
keeps their fathers' footsteps and may even be able to
build a two-storied house. Do they become richer? The
village is still well below poverty line set by Chinese
government. |
contact us : World Trade Organization, rue de Lausanne 154, CH-1211 Geneva 21, Switzerland
