We will be making a proposal for this call to action tomorrow (15 Dec) at the OWINFS Inside-Outside meeting in Hong Kong for folks to do actions or press work in home countries related to Services-Development trick.
Wed, 14 Dec 2005
--
Deborah James, Global Economy Director
Global Exchange
415.575.5537 direct line
415.255.7296 x245
415.255.7498 fax
2017 Mission Street #303, San Francisco, CA 94110
http://www.globalexchange.org
This week, government negotiators from around the world are meeting in Hong Kong to negotiate the fate of public services, the global food supply, and jobs and development. In particular, this Ministerial is shaping up to focus on a developed country proposal to force the permanent liberalization of services, purchased by a so-called ìdevelopment package that is a misnomer of epic proportions.
Civil society organizations from around the world are in Hong Kong protesting the WTO. At the same time, developing countries are facing strong pressure from the US and EU to give in to their demands on the negotiations.
We call on our counterparts in our home countries to help us ensure that the truth about the WTOís threat to our livelihoods, services, agriculture, environment, democracy, sand sovereignty is covered in the media.
We especially ask for help in putting pressure on our representatives here in Hong Kong by reminding them that they are in Hong Kong to represent us, the people back home, and not to give in to developed country pressure.
Therefore we issue a call to action, asking for solidarity to:
1. Protest the unfair negotiations of the WTO that have had disastrous effects on farmers, workers, women, and the environment in the last ten years, and promise more of the same unless the WTO is turned around. In particular, to draw attention to the trick of the Services-for-Development scheme that is being cooked up in the WTO, detailed below.
2. Send a press release to your local media ensuring that the truth about the negotiations gets out. A sample press release is attached, which we encourage you to edit for your use.
We have attached a short summary on the technical aspects of the negotiations; an explanation detailing why the sectoral services negotiations are dangerous; and a short paper detailing the scam of the so-called Development package.
Civil society organizations and trade unions reject the current negotiations in the World Trade Organization, particularly the current text on Services called ìAnnex C of the draft declaration being discussed in Hong Kong this week.
We are appalled by the severe push by the developed countries in the current round of negotiations on the General Agreement on Trade in Services (GATS) to fundamentally re-write the way negotiations in services are to be conducted, in order to force countries to privatize services, and ensure that this privatization is locked in forever.
This will put countries, particularly developing countries, on a rapid and premature path of liberalization ñ forcing the selling off of domestic public and privatize services to foreign multinational corporations, cutting off access to essential services for the poor and damaging prospects for development ñ by seriously eroding the already limited flexibilities available to members in the negotiations.
In particular, financial services, telecommunications, energy, transportation, express delivery, distribution, water, education, and health are being targeted, among others.
We demand that OUR COUNTRY join others in safeguarding the developmental principles and priorities in the current WTO negotiations on services.
In addition, we denounce the bribe of a so-called ìdevelopment package that countries are being offered in order to accept the trick of expanding the breadth and scope of services negotiations. This so-called ìdevelopment package is a scam designed to pull the wool over the eyes of the developing countries with a few financial bribes, such as new development aid money; a promise of allowing unrestricted market access for the poorest countries;
But the US will not be offering any new aid money, and cannot deliver on promises of zero tariff or zero quota for the poorest countries. Also, the aid-for-trade cash is part of the old dependency building aid program and in fact strengthens the hold of the IMF and World Bank on developing countries. In addition, a significant part of this aid will be in the form of loans, which will simply drag developing countries deeper into debt.
The real aim of the scheme is to enable developing countries to comply with their WTO commitments to liberalize trade, not to make trade compatible with development.
This trick is worse than the Grinch that Stole Christmas. The US and EU are masquerading as Santa Claus, offering gifts of a so-called Development Package. But when you the so-called ìgift you find that the Package is empty. Or worse, that it is full of coal, because we will have been tricked into privatizing our services in exchange.
We therefore urge OUR COUNTRY to take leadership and be steadfast on this issue at the WTO ministerial meeting and completely reject the Annex C of the Hong Kong draft declaration.
WTO negotiations, particularly the services negotiations in Annex C, if accepted, will have a profoundly adverse impact on the needs and interests of developing countries.
The current GATS negotiations are premised on the principles of progressive liberalization and by the right of member states to regulate. These negotiating precepts and parameters derived from the GATS agreement are carefully codified in the document known as the ìthe Guidelines and the Procedures for the Negotiations on Trade in Services (S/L/93). By virtue of paragraph 15 of the Doha Ministerial Declaration, the guidelines provide the mandate for the ongoing services negotiations.
These principles are important, for they allow member states to determine for themselves the breadth and depth of services liberalization they are ready to undertake in the current negotiations.
At present, the GATS uses a positive list approach where countries list only the commitments they are willing to undertake. Moreover, the negotiations are on a bilateral request-and-offer basis, and countries have the right to make offers according to what they consider appropriate in their national interests.
These principles are now being threatened by Annex C to the draft WTO ministerial declaration that trade ministers are negotiating in Hong Kong during the 6th WTO Ministerial Meeting from the 13-18th Dec 2005.
Despite the strong opposition raised by many developing country members during the negotiations, some these proposals of the developed country members managed to find their way into this annex which deals with the services negotiations.
In accordance with what the developed country members have proposed, paragraph 1 of Annex C attempts to get all countries to bind their existing levels of actual liberalization for modes 1 and 2 of supply; and in relation to mode 3 of supply countries would have to make commitments on ìenhanced levels of foreign equity participation and ìallowing for greater flexibility on the types of legal entity permitted. This is a back-door entry of the issue of Investment that was strongly and successfully rejected by developing countries in the Cancún Ministerial and codified in the July Package.
Furthermore, paragraph 7(b) of Annex C obliges all countries to participate in plurilateral negotiations in services. Members who have received requests in a specific sector or mode of supply ìshall enter into plurilateral negotiations to consider such requests. The use of the word ìshall means that developing countries will be forced to enter into negotiations in sectors in which they are asked by developed countries, and not the sectors of their own choosing.
Taken together, developing countries would be forced institutionally to commit a significant number of commercially important sectors to liberalization and to deepen that liberalization by removing restrictions on market access and national treatment, and other state regulations regardless of whether it is in their interests to do so.
In 1997, the WTO completed sectoral negotiations in Telecommunications and Financial Services. These negotiations, together with Maritime and Mode 4 had been carried over from the Uruguay Round. The negotiations on Telecoms and Finance, sectors US and EU were most keen on liberalizing, were successfully completed, whilst negotiations in the other two sectors collapsed.
In the current Round, it was agreed by all Members in 2001 that liberalisation can be advanced through bilateral, plurilateral or multilateral negotiations, but that the main mode of negotiations would be the request-offer approach. Negotiations are to also respect the flexible bottom-up approach enshrined in the GATS where countries can choose their pace and level of commitments. However, the EU, US, Japan, Australia etc are exerting great efforts in Hong Kong to change the rules and launch mandatory sectoral negotiations through Annex C and para. 21 of the draft Ministerial text. If launched, these negotiations would result in a framework of regulation in each sector that favours the interest of foreign investors or at least demands that foreign investors are given equal treatment as local suppliers.
Domestic suppliers in most developing countries are hardly competitive in comparison with the multinational giants. Aggressive liberalisation through sectoral negotiations will have serious implications on the survival of local suppliers, employment and the economy. The following are some examples of the demands and implications in key sectors.
A key objective of the negotiations in distribution, is to allow the access of foreign supermarkets into all countries. In practice, this means that the few large supermarket chains such as Wal-Mart, Tesco, Carrefour and Metro, which already dominate the retail market in most continents, will expand even further. These large supermarket chains use practices that lower prices for consumers but squeeze their suppliers and sometimes exploit their employees. For instance, Carrefour and Walmart Korea have been fined for bringing prices down by too large a margin, affecting other local retailers. The demand for supply in large volumes and high quality by supermarkets has also excluded small farmers and local suppliers from accessing the market.
If sectoral negotiations are launched, a pro-liberalisation framework of regulation would be put in place, including:
The GATS agreement already has a model for rapid liberalisation of investment and trade by foreign banks, insurance companies and other financial services, called the Understanding on Commitments in Financial Services. If sectoral negotiations are again launched, the liberalisation agenda would build on the current Understanding.
Already, this model requires far reaching liberalisation, and only very few developing countries have undertaken full commitments according to this framework. Apart from listing the many financial services that need to be liberalised, this model requires governments:
The US, EU and others, argue that financial liberalisation helps developing countries become more efficient. But this ignores the fact that:
GATS negotiators from the North have ignored the lessons learnt from the Asian financial crisis that liberalisation of financial services and capital require the necessary regulation and a well organised sequencing, rather than swift liberalisation.
If the health sector is fully liberalised, this would mean the prohibition of any limits on the numbers or activities of service providers (even if such policies are completely non-discriminatory, applying equally to foreign and local service providers). This prohibition is completely at odds with public policies that are designed to allocate health resources more equitably, for example between urban and rural areas, rich and poor people and between the public and the private not-for-profit sectors. Also, the application of the GATS national treatment rule in the health sector conflicts with policies that call for greater community-based control and decision-making (e.g. requirements that a majority of the board of directors of hospitals or health providers be chosen from the community they serve.) Such planning policies and local accountability measures are essential for ensuring access to health care as a basic human right. The strong pressure being put on WTO member governments to make substantial GATS commitments therefore poses a serious threat to redistributive health policies around the world.
Establishing a sectoral initiative on energy services, including gas and oil, would shift control of the most strategic resource for the global economy, from governments to private oil services giants like Halliburton. Energy-consuming nations claim that the free access to 70 percent of the world's 1 trillion barrels of proven oil reserves is "restricted" by regulation in energy-exporting nations and that stability of energy markets requires their opening up to more foreign investment and energy service providers by adopting new WTO rules. The Bush White House has made WTO Energy Services a top trade priority and the institutional centerpiece of its overarching foreign policy goal of establishing "global energy security."
A decision in Hong Kong to approve so-called plurilateral sectoral approaches would allow the US and other "Friends of Energy" to require all WTO Member energy exporters to open up their sectors to more privatization and the implementation of regulation favoring foreign companies. This will not result in a transfer of "ownership" per se over resources but will lock in a set of rules that will allow others to decide if, how, and by whom their resources would be utilized. This will effectively handcuff energy-rich nations from developing sectors that create domestic employment and technological expertise, as well as shift decision-making over future greenhouse gases from the UN Kyoto Protocol to the WTO.
Foreign education providers want to remove regulatory settings which affect governance and ownership of institutions, accreditation, recognition of qualifications, educational materials, and quality. For example they object to joint venture and minimum foreign equity requirements, restrictions on setting up branch campuses overseas, restrictions on recruitment of students and on marketing, and requirements for local representation on the board of educational institutions. Countries such as New Zealand have had problems with unsustainable booms in the number of private English language schools, followed by financial failures leaving international students financially disadvantaged with uncompleted courses. GATS would prevent governments regulating the number of such schools or the number of students. Neither could they direct overseas owned private schools or tertiary education institutions into particular locations or courses needed for development reasons. If local private providers may receive government funding, foreign owned providers would be entitled to at least the same level of funding. Preferential access for local private higher educational institutions to public research grants and funding would not be allowed.
Domestic and coastal shipping is still heavily regulated. There are barriers in many domestic shipping services. In some countries foreign ships are banned from coastal trade, and only its own flagged ships are able to transport goods internally. Those with a competitive edge would like to eliminate some of the restrictions on foreign equity ownership and management in ports. Any sectoral negotiations would push de-regulation of this sector in such a direction.
* This document was collectively written by Scott Sinclair, Myriam Vander Stichele, Victor Menotti, Yvette Pena Lopes, Bill Rosenberg, Toni Verger and Aileen Kwa.
Statement at Press Conference of Walden Bello, Focus on the Global South,
Hong Kong, Dec. 13, 2005*
With the negotiations stalemated in the key areas, the WTO Secretariat and the big trade powers are using the scheme of a "development package" to pass off the current ministerial conference as a success. The idea is to gain consensus for the development package now, then push for agreement on the more controversial areas of services, agriculture, and non-agricultural market access in a more protracted process extending over the next few months, possibly culminating in another ministerial by the middle of 2006.
The only problem is that the developing countries are not likely to fall for it, because they realize that this development package is empty.
The so-called development package consists of several elements:
The duty and quota free access proposal comes up against extreme reluctance by the United States (US) to grant this, as shown by the US reserving the right to invoke safeguard measures in the form of tariff increases against such imports when it deems this necessary. The European Union (EU) has also indicated that it could seek concessions to protect its own domestic markets from excessive duty and quota free imports through safeguard measures on specific products.
The aid for trade scheme is hollow for various reasons. One, there are few concrete commitments from key developed countries, and certainly not from the US. Indeed, there is no new money at all, and the aid-for-trade cash is part of the old dependency building aid program and in fact strengthens the hold of the IMF and World Bank on developing countries. Two, a significant part of this aid will be in the form of loans, which will simply drag developing countries deeper into debt. Three, the real aim of the scheme is to enable developing countries to comply with their WTO commitments to liberalize trade, not to make trade compatible with development. What is this except trade facilitation, which is already part of the negotiations? Again, this is a case of smoke and mirrors. Four, the scheme is built around upgrading the capacities of developing countries to export specific products to the donor countries, meaning it is the needs of the latter that predominate. This is certainly the case with the Japanese aid for trade package being proposed, which clearly outlines how Japanese expertise, technology, goods and services will be used to develop niche products for Japanese markets. This niche market development is an economically risky strategy since it would structure production capacity of LDCs around the changing needs and preferences of external markets over which producers have no control.
The third major problem with the development package of the draft ministerial text has to do with its call for the ìeffective implementation of the Integrated Framework. What this means is to more strongly coordinate trade liberalization policies committed under the WTO with the structural adjustment policies imposed by the World Bank and the International Monetary Fund (IMF). These controversial policies are the primary cause of economic stagnation, increase in unemployment and poverty, and the increase in inequality in so many of the ìadjusted countries.
Fourth, the incorporation of the TRIPs and Health implementing decision cannot count as a positive element development-wise since the export of life-saving drugs from developing countries with manufacturing capacity to countries with no capacity is so hemmed in with onerous restrictions by the transnational corporate patent holders that few, if any, countries have sought a waiver from the TRIPs Agreement to take advantage of it.
Fifth, the so-called Special and Differential Treatment provisions do not really respect the special structural conditions of LDCs that have hindered development, but speed up their capacity to live up to their WTO commitments, to undertake what the draft ministerial text calls ìtheir implementation obligations.
How can the LDCs take the commitments of the developed countries seriously when the US continues to maintain cotton subsidies that have wrought tremendous suffering among West African farmers, including the Step 2 Program? How can they take this seriously when what the US is considering as compensation--$7 million to five countries--is miniscule compared to the tremendous losses in incomes and livelihoods that African farmerss have suffered?
The problem is the current rules and institutions governing trade; no amount of aid can ever substitute for the fundamental transformation of these rules and institutions. This development package is like the so-called debt reduction schemes that make countries even more indebted and economically vulnerable than when they entered the program.
In conclusion, the development package is deceptive and dangerous. Its purpose is not to assist developing countries integrate trade into development, but to trick them assenting to a problematic deal. It is meant to split the ranks of the developing countries, thus facilitating an agreement that only serves the interests of the rich countries. We urge the developing country governments to stand together and reject this package.
hong kong reports | hong kong 2005 | www.agp.org (archives) | www.all4all.org