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| Kathmandu, Saturday September 13, 2003 Bhadra 27, 2060. |
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To
cheer or not to cheer
By Dr Hiramani
Ghimire
N epal has been offered
WTO memebership. When the Cancun ministerial conference endorsed the membership, Nepal
became two of the first least-developed countries (Cambodia being the other) to accede to
the WTO. Nepal needs, of course, to ratify it. Five precious years of accession
negotiations have borne fruits, and a new ‘trade era’ has dawned. How should we
view—or even celebrate—this event?
A recently released
World Bank report (Global Economic Prospects 2004: Realising the Development Promise of
the Doha Agenda) sees the Cancun meeting as an opportunity to lift as many as 144 million
people out of poverty by 2015. According to the report, progress in Cancun could
"spur confidence, boost income, and reduce poverty" around the world. In this
sense, Nepal’s WTO membership is something to be happy about.
There are roadblocks
ahead. The Doha round was launched in November 2001 with the basic objective of
integrating developing and least-developed countries into the multilateral trading system.
It was the first time that the interests of the developing country received serious
attention in multilateral trade negotiations. However, the progress of the Doha round is
faltering. Developed countries have failed to keep their promises made at Doha.
The most difficult
issue on the agenda is agriculture. Negotiations during the Uruguay Round (UR) itself were
dominated by agriculture. The post-UR years have seen an ever-intensifying debate on
agriculture. In breach of the spirit of the WTO Agreement on Agriculture, some developed
countries are reviving agricultural protectionism. At Doha, they agreed on liberalising
farm trade, but reneged on it later. As a result, almost everyone is losing. Taxpayers in
developed countries are losing more than $300 billion doled out annually on subsidy
payments, especially to big farmhouses. On the other hand, import restrictions and high
tariffs have kept food prices high for consumers. At the same time, farmers in poor
countries are being stripped of livelihood opportunities as they are losing out on
international markets. The paradox is clear: some 1.2 billion people in the developing
world live on less than one dollar a day whereas a day’s subsidy for a European cow
amounts to two dollars.
Nepal is also keenly
watching how the debate on intellectual property rights covered by the TRIPs agreement
moves ahead. The Doha declaration on this issue was very important in that it recognised
the primacy of public health over TRIPs. Again here, the response was poor. After a long
hiatus of missed deadlines, the United States and other developed countries have now
agreed to allow import of some life-saving drugs by least-developed countries under ‘compulsory
licensing’ (a legal tool that gives a company the right to manufacture patent drugs
without the patent-holder’s consent). Nepal could benefit from this system. While
this has been achieved in the run-up to the Cancun meeting, the administration of this
system will be a challenging job. On another front, the TRIPs agreement is inconsistent
with the Convention on Biological Diversity (CBD) to which Nepal is a party. While CBD
promotes the concept of community rights, TRIPs advocates ‘company rights’. The
farming community is thus a potential victim of TRIPs.
Nepal with a large base
of unskilled and semi-skilled labour is also interested in promoting better opportunities
for trade in services supplied by less skilled persons. LDCs as a group are working
together on securing an understanding on this issue. According to some estimates, a
temporary visa scheme allowing cross-border movements of service providers from LDCs up to
three percent of the OECD labour force would result in economic benefits equivalent to
US$150-200 billion (3-4 times the current level of global development aid) for both
developed and developing countries. The WTO members have recently agreed to undertake
commitments on enhancing such movements, "taking into account all categories of
natural persons identified by LDCs." This would be done, of course, "to the
extent possible". Such phraseology represents an in-built mechanism for developed
countries to wriggle out of their commitments.
The WTO system has an
explicit understanding that least-developed countries like Nepal would be able to enjoy
special and differentiated treatment. The idea is related to positive discrimination. In
other words, developed countries vow not to seek reciprocity from poorer countries in the
South. But these ‘special favours’ are designed by adopting a technical approach
to looking at the stage of a country’s development. By and large, they fail to
reflect human and institutional capacities in any given country. On the other hand,
promises on special treatments are hardly kept.
The WTO has been
encouraging the participation of LDCs in its activities. Without this, the legitimacy of
the WTO would be questionable. Such an image crisis needs to be avoided. Accordingly, the
WTO is working on it. This is an advantage for us. The WTO is often seen as a model of
democracy among international institutions. For example, the Global Accountability Report,
2003 prepared by a UK charity has given high marks to the WTO, ranking it third on access
to online information, eighth on member control, and fourth overall among
18 inter-governmental organizations, transnational corporations, and international
NGOs. The WTO has no ‘security council.’ All agreements in it are reached by a
consensus of its members on a ‘one member, one vote’ principle. In other words,
every country has a veto. Besides, an arbitration mechanism is available to those who want
to use it against foul play.
However, the reality is
much different from this democratic ideal. The notion of consensus-based decision-making
nullifies the ‘one member, one vote’ principle. Even in the WTO, some members
are more equal than others. Members, not actively opposing a position, are deemed to be
supporting it. This is so even when they are not present at a particular meeting. In this
way, the much-hyped consensus turns out to be ‘passive consensus’ in practice.
This allows powerful countries to use a variety of ‘silencing tactics’ against
weaker nations in order to manufacture consensus. The use of ‘green rooms’
(which are restricted to the rich and powerful) in negotiations is but one example. More
subtle forms include aid diplomacy, trade preferences, and political maneuvering.
The WTO system is
particularly about reducing barriers to trade. This is, however, not a sufficient
condition for realising the development promise made, for example, at Doha. Trade
promotion also involves creating infrastructure, enhancing the quality of public services
such as health and education, streamlining policy processes, and improving governance
accountability. Our experts in the policy circle are euphoric about the WTO’s
potential contribution to good governance through its rules-based system. This could be
misleading. Experience tells us that externally induced policies hardly work miracles.
What we need is spontaneity and responsiveness. Both are not forthcoming.
Given these
opportunities and challenges for Nepal in the WTO, one is not quite sure about how to
respond to the newly acquired membership. In other words, to cheer or not to cheer (it) is
the question!
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