Report of the Conference on Post Cancun Agenda for South Asia

South Asia Watch on Trade, Economics and Environment (SAWTEE)/Consumer Unity and Trust Society (CUTS)

30 November - 2 December 2003, Kathmandu

• Equipping the South Asian stakeholders, including the civil society representatives, government officials and negotiators, as well as general public, with necessary knowledge relating to the emerging WTO issues.
• Identifying the areas of common concerns of the South Asian nations and converging other individual concerns towards forming a common position for the purpose of negotiating at the WTO as a South Asian block.
• Training the different stakeholders on newer and emerging issues, the understanding of which is much below the understanding of older issues that are being discussed at the global level.

The event was broken into two components:

• The first day of the event focused on the common WTO issues confronting the South Asian countries in the post-Cancun scenario: agriculture, Singapore issues and TRIPS and Public Health.
• The second and third day were devoted to provide training on newer issues that are being discussed or emerging at the multilateral level: Trade & Environment, Biotechnology, Services, Implementation issues, Special and differential treatment, and so-called Singapore Issues (which include competition, investment, trade facilitation and transparency in government procurement).

53 participants representing NGOs, media and governments from India, Pakistan, Sri Lanka, Bangladesh and Nepal participated in the event.

Inaugural Session

Delivering his welcome speech Mr. Dev Raj Dahal, Head, FES Nepal said that the Cancun failure exhibits the complexity of North-South negotiations. He also added that achieving a more peaceful and more equitable world order requires a global community based on negotiated consensus. That is important to create a level playing field and to avoid distortions in trade. He stated that non-implementation of WTO agreements by the rich nations, pressure on weaker countries to open their lucrative services markets while protecting their own farm sectors, and rich countries' relentless pursuit for obtaining new concessions on investment have increased weaker nations' vulnerability to global economic uncertainties.

In his guest speech Mr. Dinesh Chandra Regmi, Secretary, Ministry of Industry, Commerce and Supplies said that the event was timely because it was necessary for the countries in South Asia to take stock of what transpired during the Cancun Ministerial and plan their future strategy given the fact that stalled talks at Cancun are expected to start in Geneva from the middle of December. He also added that the way developed countries view agriculture has to undergo a metamorphosis to ensure fair trade in this sector.

In his inaugural speech Dr. Shankar Sharma, Vice Chairman, National Planning Commission said that the developing as well as the least developed countries (LDCs) should maintain their unified stance in order to reap maximum benefits offered by the global trading regime, namely the World Trade Organisation (WTO).

Delivering his remarks, chairman of the session Dr Posh Raj Pandey, President, Executive Committee, SAWTEE said that there has been numerous failures at the multilateral level, but those failures did not inflict any serious damage to the global trading regime. He added that the Cancun failure has in fact given all the opportunity to introspect where and what went wrong. Dr Pandey added that it is in the best interest of South Asia to have a rule-based multilateral trading system than to have untamed trading regime under which developed countries get free hand to develop their own unilateral legislation and practices.

Ms. Diana Melis, Research Associate, CUTS, Jaipur thanked the special guests, resource persons, participants and donors/partners for their support and cooperation in organising the event.

Technical Session 1: TRIPS and Public Health

Two papers were presented in this session:

1. "TRIPS and Public Health: What needs to be done in human rights perspective" - Shafqat Munir, President, Journalists for Democracy and Human Rights, Islamabad, Pakistan
2. "TRIPS & Public Health: Patent rules and access to medicines" - Leena Chakrabarti, Oxfam GB in India.

Dr. Jafrullah Chowdhary, President, Consumer Association of Bangladesh, Dhaka and Dr. Surenrda Bhandari, Director, Foundation of Parliamentary Studies, Kathmandu were the discussants during the session.

The major issues raised/ discussed during the session were:

• The right to healthcare has been recognised as a "fundamental right" by the international community since the adoption of the Constitution of the World Health Organization in 1946 and states obligations under the international law of human rights take precedence over other obligations under international law including trade agreements.
• National patent laws must take maximum advantage of Article 30 of TRIPS Agreement that allows member states to include in their patent laws some limited exceptions to the exclusive rights of the patent-holders.
• Public funds should be mobilised to finance research and development in pharmaceuticals and to provide for innovation in vital fields such as tropical diseases (need driven and not only demand driven research).
• WTO rules affecting drugs are loaded against the poor. Price increase of drugs resulting from extension of exclusive marketing rights will have grave consequences for public health in developing countries.
• Developing countries must build pressure to begin the mandated review of the TRIPS agreement.
• Prices of drugs are high in developing countries not only due to patents but also due to wrong policies of government.
• Drugs should not be treated as an ordinary commodity as consumers do not use their discretion in purchasing drugs and depend on third party (doctor) recommendation.

Technical Session 2: Singapore Issues

The following papers were presented during the session:

1. "Singapore Issues : South Asian Perspective" - James J. Nedumpara, Consultant, UNCTAD - India
2. "Singapore Issues: The Mercantile Game Plan to Wreck the Development Agenda" - Nitya Nanda, CUTS, Jaipur.

Ms. Avanthi Gunatilake, Research Assistant, Law and Society Trust, Sri Lanka and Mr. Sajid Kazmi, Research Associate, SDPI, Islamabad were the discussants during the session.

The following points/issues were raised/ discussed in this session:

• The developing countries are generally opposed to new issues because the real intention of the developed country members of WTO to raise Singapore Issues is to block progress in agriculture liberalisation.
• Developing countries are unilaterally providing investment friendly environment and a Multilateral Agreement on Investment will limit the policy scope of developing countries.
• Developed countries must provide support for progressive reinforcement of competition institutions in developing countries through capacity building.
• Transparency in Government Procurement issue is a Trojan horse for market access agenda.
• Implementation of trade facilitation measures will place substantial financial burden on developing countries.
• South Asian countries must negotiate to put the Singapore issues in the backburner, if not drop from WTO agenda, until other issues such and agriculture, special and differential treatment and TRIPS and Public Health are addressed.
• Diversity in South Asia makes it difficult to reach a common position on all these issues. Thus the strategy for South Asia should be to have issue based agreements on some issues and stagger decisions on other issues on which immediate agreement cannot be reached.

Technical Session 3: Agriculture

The following two papers were presented in this session:

1. "South Asian Agriculture Despite Cancun Setback - Balancing Livelihood Options with Three Pillars of AoA" - Dr. J. George, Research Fellow, Research and Information System for the Non-aligned and other Developing countries, New Delhi
2. "WTO Regime on Food and Agriculture and Issues for the region" - Dr. Wajid H. Pirzada, Director Research (WTO), Pakistan Agriculture Research Council, Islamabad

Dr. Ananya Raihan, Research Fellow, Centre for Policy Dialouge, Dhaka and Dr. Posh Raj Pandey, President, Executive Committee, SAWTEE, Kathmandu were the discussants during the session.

Issues raised and discussed during this session were as follows:

• South Asian countries have "small holder" subsistence farming that needs to be highlighted in negotiations on agriculture.
• Agriculture is home spun "safety net" of developing countries and this is at stake due to various agreements of WTO that have direct impact on agriculture.
• South Asian countries must be clear on what they want - Agriculture Policy aimed at food security or export earnings.
• Developed countries raised the Singapore issues in Cancun, as they did not want the Cancun negotiations to fail due their non-compliance on agriculture issues.
• In addition to the three pillars, a fourth pillar special and differential treatment for selected products needs to be added in AoA.
• Tariff escalation and export subsidy in the developed countries are harming the export potential of the developing countries.
• South Asian countries must seek time bound commitment to remove all subsidies in the agriculture sector by the developed countries.
• South Asian position in agriculture must be based on thorough research and not only rhetoric.
• Development of agriculture and agriculture processing in South Asian countries has been hindered due to lack of market access in developed countries.

Technical Session 4: Investment and Transparency in Government Procurement

Mr. B.V.R. Subramaniam, Director, Ministry of Commerce, Government of India presented papers on Investment and Transparency in Government Procurement. The following points / issues were raised/ discussed during this session:

• The developed countries are pushing investment issues because they are the suppliers of investment and FDI is crucial for their business strategies to benefit from high growth in developing countries.
• WTO is already overburdened and it does not make sense to bring investment into WTO.
• A multilateral framework on investment does not guarantee higher FDI in developing countries.
• Investment policies are linked closely to the national development policies and should not be linked only with trade.
• Transparency in government procurement (TGP) could be a disguised attempt to seek mandate for an agreement prescribing procurement practices of members.
• TGP is the first step towards the eventual inclusion of market access provisions for government procurement - which is detrimental to the interests of the developing countries.
• Developing countries' right and ability to make and modify public procurement rules/regulation should in no way be affected by any transparency agreement as government procurement is also used as a tool to implement social and industrial policy.

Technical Session 5: S & DT and Implementation Issues

The following two papers were presented in this session:

1. "Implementation Issues - Bad-faith negotiation tactics of the major trading powers" - Dr. Abid Suleri, Research Fellow, Sustainable Development Policy Institute (SDPI), Islamabad, Pakistan.
2. "Special and Differential Treatment - A Post Cancun Update" - Mr. Faisal Haq Shaheen, Visiting Research Associate, SDPI, Islamabad, Pakistan.

Following points/ issues were raised in this session:

• Developing countries have not benefited from WTO regime because the developed countries have not complied with the Uruguay Round agreements.
• South Asian countries should say no to new issues until implementation issues are fully resolved.
• South Asian countries must demand further Special and Differential Treatment (S&DT) for the "WTO plus steps" that have been already taken under WB, ADB and IFM conditions.
• Civil society organisations must get engaged with the states and build their capacity on WTO issues.
• International Financial Institutions (IFIs) are medieval organisations. Their decision-making system must be revamped.
• The main problem of S&DT provisions under the WTO is that the important ones are not mandatory.
• Of the four types of S&DT clauses longer transition periods and reduced level of commitments are binding but increased market access and Technical Assistance are merely best endeavor clauses, which can never be enforced.

Technical Session 6: Trade in Services

In this session Dr. Upali Wickramasinghe, Research Fellow, Sri Jayawardhanepura University, Colombo, Sri Lanka presented the paper - "Post Cancun Agenda for Trade in Services."

The main points/ issues raised/ discusses in this session were:

• Small economies should only be expected to "take commitments that are commensurate with their capacities, levels of development and size of economies."
• National treatment should be given to services and service providers from LDCs in sectors and modes in which the LDCs have specific export interests.
• Commitments made by developed countries are in the areas of their comparative advantages e.g., value added products in telecom, financial services.
• Despite the commitments, access to markets in developed countries is very limited due to a number of market access limitations such as tax measures, nationality requirement, licensing and standards.
• South Asian countries must ask the developed countries to leave some horizontal limitations such as residence requirements, property limitations and visa granting process.
• South Asian country must ask for deeper liberalisation in mode four (movement of natural persons) from the developed countries.
• South Asian countries must ask the developed countries to widen the definitions of professional services so as to include "occupations" according to the International Standard Classification of Occupations (ISCO) of the International Labour Organisation (ILO).

Technical Session 7: Trade Facilitation

Prof. Dr. Bishwambher Pyakuryal. President, Nepal Economic Association, Kathmandu presented a paper entitled "Trade Facilitation Initiative: An Overview of Measures Assessing Nepal's Status Under Current International Trade Practices."

The following points/ issues were raised / discussed in this session:

• Trade Facilitation (TF) is basically removing the procedural obstacles by rationalising border controls in customs, standards, quarantine regulations etc. to international trade.
• The cost of TF implementing measures is very high and developing countries do not have adequate financial resources. It is estimated that it will cost Bangladesh US $ 300 million to implement trade facilitation measures. Hence, South Asian countries must link TF measures with technical assistance.
• Trade Facilitation will definitely increase efficiency and is desirable even in developing countries but many feel that the benefits may not be commensurate with the cost.
• TF measures should be implemented by the developing countries and LDCs in an autonomous manner, but this issue should not be included within the WTO proscenium.

Technical Session 8: Biotechnology

Dr. Hari Prasad Bimb, Chief, Biotechnology Division, Nepal Agriculture Research Council, Lalitpur, Nepal presented the paper "Biotechnology in Agriculture: Opportunities and Challenges".

The following points / issues were raised/ discussed during this session:

• According to the Convention of Biological Diversity (CBD) biotechnology is any technology application that uses biological systems, living organisms or derivatives thereof to make or modify products or processes for specific use. Modern biotechnology applies the advances made in cell and molecular biology using two different techniques: tissue culture and recombinant DNA popularly referred to as " Genetic Engineering".
• The major concerns of the developing countries regarding the current global trends on biotechnological research and developments are:
  • Whether the biotechnology revolution would help resource poor farmers to increase productivity.
  • What will be the potential adverse impact of genetic engineering research directed at finding substitute for national products e.g., corn syrup, natural or synthetic sweetener as substitute of cane and beet sugar on the farming sector.
  • What will be affect of GMOs on people's health in the developing countries that are being used as testing grounds by MNCs to avoid stringent regulations prevailing in the industrialized countries?
• Within SAARC all countries are at different levels of development regarding biotechnology.
• A network on IP is strongly needed among the SAARC members.
• There needs to be an evaluation of the broader impact of biotechnology on society.
• Biotechnology in agriculture is fully recognized as a powerful tool for sustainable agriculture, specially keeping in view the needs of small and marginal farmers.
• Research on staple food crop species in the developing countries needs to be supported internationally.
• Nature is more intelligent than human beings and we should not play tricks with nature.
• Distribution of food is the problem in the developing countries not production and the biotechnologies are high cost and not suitable for small farmers in South Asia.
• For South Asia the issue is not to oppose biotechnology but to understand how it can be used to out benefit.

Technical Session 9: Non Agriculture Market Access

In this session Dr. Ananya Raihan, Research Fellow, Center for Policy Dialogue, Dhaka presented a paper on Non Agriculture Market Access.

The following points / issues were raised / discussed in this session:

• The barriers to market are of different types:
  • Trade barriers: tariff escalation, tariff peaks, tariff dispersion in manufacturing products, complex and non-transparent tariffs and tariff rate quota (TRQ)
  • Non-trade barriers: Export/import quota, quantitative restriction (QR), Voluntary Export Restraint (VER), Rules of Origin (RoO), Discriminatory Government Procurement practice, Anti Dumping and Countervailing duties, predatory pricing and price discrimination, Sanitary and Phytosanitary Measures (SPS), Technical Barriers to Trade (TBT), Subsidies, trade distorting policies such as labor standard.
  • General Agreement on Trade in Services (GATS): Restriction on movement of natural persons (Mode 4 of GATS), Immigration policies and qualifications, quantity restriction on visa for professionals, entry barriers in the forms of Entry Needs Test and Local Market Test
  • Environmental Measures: Eco Labeling, Compliance sticker
  • New Issues: Safety, Customs Valuation, Trade facilitation related barriers.
• Perspective, interests and strategies in South Asia may not always converge in all the areas and all the issues. However, it is of critical interest to all South Asian countries that common interest are articulated, conflict of interests are identified, and a renewed effort is made in terms of plying a more proactive role in WTO.

Technical Session 10: Trade and Environment

In this session Mr. James Nedumpara, Consultant, UNCTAD India presented paper on Trade on Environment Issues in WTO.

The main points /issues raised / discussed during this session were:

• Committee on Trade and Environment (CTE) was established in 1995 in accordance with the Uruguay Round of Ministerial Decision with the following mandate:
  • To identify the relationship between trade measures and environmental measures in order to promote sustainable development
  • To make appropriate recommendations on whether any modifications of the provisions of the Multilateral Trading System (MTS) are required. The CTE covers all areas of the MTS including goods, services and intellectual property.
• In the Doha Ministerial Declaration the CTE was asked to give particular attention to the following:
  • The effect of environmental measures on market access, especially in relation to developing countries, in particular the LDCs
  • Situations in which the elimination or reduction of trade restrictions and distortions would benefit trade, the environment and development
  • The relevant provisions of the TRIPS Agreement
  • Labelling requirements for environmental purposes
  • Works on these issues should include the identification of any need to clarify relevant WTO rules
  • The Committee shall report to the Fifth Session of the Ministerial Conference, and make recommendations, where appropriate, with respect to future action, including the desirability of negotiations
  • Ministers also recognised the importance of technical assistance and capacity building in the field of trade and environment to developing countries, in particular the LDCs
  • Ministers also said that expertise and experience be shared with Members wishing to perform environmental reviews at the national level
• Environmental protection is used as an argument both in favour and against agriculture liberalisation
• Many developing countries argue that the TRIPS Agreement should support the CBD provisions in the areas of biological resources and traditional knowledge systems.
• TRIPS doses not mention CBD principles; in particular sovereignty, Prior Informed Consent (PIC), Equitable share of benefits, Protecting the rights of communities, farmers and indigenous people.
• According to Precautionary principle absence of full scientific certainty should not be used as a reason to postpone measures to prevent environmental damage.

Technical Session 11: Competition

In this session Mr. Nitya Nanda of CUTS Jaipur, India presented the paper "Competition Agreement at the WTO: The Right Initiative at the Wrong Forum".

The main points / issues raised / discussed in this session were:

• Market power in global or export markets may be gained through: international cartels, export cartels and related arrangements, international mergers or mergers with international spill-overs, abuses of dominance in overseas markets and cross-border predatory pricing and price discrimination.
• Barriers to import competition can be created through: import cartels, vertical market restraints creating import barrier, private standard setting activities and abuse of monopolistic dominance.
• Cartels may be formed if Intellectual property rights holders engage in licensing arrangements with firms in different countries
• South Asian countries should support only the provision of voluntary cooperation and not agree on any binding global rules on competition.
• WTO should not be used as a forum to set global standards on national competition laws.

Additional Session: Nepal's Accession to the WTO

On the request of some of the participants Mr. Ratnakar Adhikari, Executive Director, SAWTEE made a presentation on Nepal's Accession to the WTO.

The main points highlighted /discussed during this session were:

• WTO plus conditions is a major hurdle for most acceding countries.
• Nepal's accession package has been described as "The best accession package so far" by UNCTAD.
• Nepal's motivation for accession are:
  • To integrate into global economy
  • To secure market for exports
  • To lock-in policy reforms
  • To strengthen domestic institutions
  • To attract foreign direct investments
  • To enhance competitive ability
  • To secure transit rights
• Positive aspects of Nepal's accession package are:
  • Foreign exchange restriction on consumption abroad
  • No membership to plurilateral agreements and UPOV
  • Inclusion of a paragraph on technical assistance.
• Negative aspects of Nepal's accession:
  • No credit for autonomous liberalisation
  • Other duties and charges (ODC) to be phased out in 2-10 years
  • Commitment on wider services (70 sub-sectors)
  • 37 legislation to be introduced/ amended
  • Provision of Doha Declaration on TRIPS and Public Health (i.e., no product patent on pharmaceutical products until 2016) unclear
• SAWTEE's role in the future:
  • Oppose any move of the government to sign UPOV
  • Support government in policy reform on agriculture and Competition Law
  • Prepare a handbook on accession
  • Continue networking, advocacy and capacity building in the area of international trade and WTO