A Strategy for the Cancun WTO
Ministerial
Declaration of the Stop the New
Round! Coalition Philippines
22 January 2003
President Gloria Macapagal Arroyo’s statement at the October summit of
APEC in Mexico decrying the unfair trade rules of the World Trade Organization (WTO)
and her more recent rhetoric against “unbridled globalization” were long
overdue. But, as they say, better late than never. One can only wish
that during the ratification process in 1994, then Senator Gloria Macapagal-Arroyo
had listened to the strong warnings of fair trade groups about the dangers posed
by the WTO instead of singing praises to free trade as she led the charge to
rubberstamp the Uruguay Round Agreement in the Upper House.
While it acknowledges the WTO’s anti-development thrust, the
administration is bereft of a strategy of how to protect us from its
consequences. Rhetorical shots across the bow are simply inadequate when
dealing with a juggernaut such as the WTO, which is moving on so many fronts
simultaneously. The country badly needs a multi-pronged, coordinated strategy
for the ongoing negotiations in agriculture, services, and industrial tariffs,
and to meet the threat of a new round of liberalization that the trading powers
threaten to launch during the Fifth Ministerial in Cancun in September 2003.
Time is running out.
Hostage
to Cairns
The Agreement on Agriculture (AOA), probably the most unfair of all the
WTO agreements, is now being renegotiated in the lead-up to the Cancun meeting.
At the time the WTO Agreement was being ratified in 1994, the Philippine
government promised that the agriculture sector would be a major beneficiary:
agriculture export earnings would increase by at least PhP3.4 B annually, its
annual gross value added would increase by PhP60 B, and it will generate an
additional 500,000 jobs yearly. These gains proved to be illusory. The
balance of trade in agriculture has worsened, there has been minimal improvement
in gross value added, and employment in agriculture has not increased
appreciably. WTO-mandated liberalization has failed to create the high-value
added export crop industries that then Senator Arroyo and pro-WTO technocrats
said would emerge from agricultural liberalization, even as there is growing
evidence of devastation in livestock and poultry as well as traditional
vegetable industries. The rice sector, which the government committed to assist
in preparing for the eventual removal of the quantitative restrictions, is now
even less prepared for opening-up than it was in 1994. On the other hand,
instead of reducing their subsidies, the rich OECD countries have raised their
subsidization of their agriculture from $182 billion to close to $500 billion in
2001.
What is the Philippines’ position in the current negotiations? On the
critical question of trade in rice, we are in the dark on whether the
Philippines is asking for an extension of quantitative restrictions under Annex
5 of the Agreement. With the government unable to deliver on its promise to
“prepare the rice sector for global competition,” and with our rice farmers
left with nothing else to hold on to, the extension of the country’s right to
subject rice to quotas is a clear demand of the sector.
We are told privately and occasionally publicly by officials of the
Department of Agriculture that the Philippines is pushing hard for recognition
of the principle of “special and differential treatment,” the formal
adoption of which would allow us much more leeway in limiting agricultural
imports than is allowed by current AOA rules under the principle that our
underdeveloped agricultural sector should not be subject to the same rules as
agriculture in the developed economies. The reality, however, is that our
negotiators are bound by the negotiating position of the Cairns Group, a
grouping of developed and developing agro-exporting countries dominated by
Australia and New Zealand. Australia and New Zealand are mainly interested in
dismantling the agricultural subsidy system of the European Union while
tolerating that of the United States. Pushing for protection of the developing
country agricultural systems under the principle of special and differential
treatment is not a priority for Australia and New Zealand. In fact, Australia
chooses to interpret special and differential treatment mainly in terms of
developing countries being able to provide their agriculture with a minimum
amount of subsidies. Why do we continue to voluntarily tie our hands by
remaining in the rich country-dominated Cairns Group?
The
Threat to Services
Another key critical area is negotiations on services under the General
Agreement on Services (GATS). Governments have already begun the process
of asking other governments for the service sectors they want opened up, and
those requested will have to respond soon. A leaked report recently
revealed the breathtaking range of services that the EU wants the Philippines to
open up completely or substantially—a long list that includes legal services,
accounting and bookkeeping, telecommunications, construction and engineering
services, maritime transport, and environmental services.
What is the government’s response to the requests of the EU, US, and
other governments? What areas is it offering to liberalize? Citizens
should not be kept in the dark about these negotiations. They must at least be
informed of what other countries are demanding, what with all the service sector
employees that could be displaced by foreign competition in an economy already
suffering from persistent high unemployment and underemployment.
An even greater concern is that GATS is really an investment agreement
masquerading as a trade agreement, one that will override not only our laws
governing foreign investment but the Constitution itself. There is a danger that
current moves to amend the Constitution would play into the hands of those who
would denationalize control of land, natural resources, and public services such
as water, energy, health, education, and other public services via GATS. What
this will lead to need not be imagined; it is already experienced in the crisis
triggered by the privatization, with significant foreign investor participation,
of water and electricity.
The Dangerous “New Issues”
Perhaps the main thrust of the Cancun meeting will be the effort to
launch negotiations in the so-called “new issues”: the “trade-related
areas” of investment, competition policy, government procurement, and trade
facilitation. Such negotiations would result in a vast expansion of the
WTO’s powers to non-trade areas. By extending “national treatment”
to foreign investors, a new agreement would lead to the near total loss of
national control over investment and deprive government of its ability to
conduct industrial policy and undertake strategic planning.
The new issues question is very controversial because there is widespread
disagreement that the Doha ministerial, in fact, launched negotiations in these
areas. According to the Chairman’s statement that accompanied the Doha
Declaration, whether or not negotiations will begin in these areas will depend
on the “explicit consensus” of all WTO member states at the Cancun summit.
Will the Philippine government take a stand, draw a line on the sand, and work
with other developing countries to stop this grant of vast new powers to the WTO?
Will it stand by India and other developing countries that hold that, in
accordance with the statement of the Chairman of the Doha Ministerial, there is
as yet no agreement to launch negotiations on the “new issues”?
Or will the Philippines side with the EU, the US, and other developed
countries that claim that there is already consensus on launching negotiations?
Trade liberalization, to use the image of C. Fred Bergsten, the
free-trade partisan who heads the Institute of International Economics in
Washington, DC, is like a bicycle: it collapses if it does not move forward.
Which is why the new issues question will be so critical: its resolution
will mean either that the WTO, with all its institutionalized inequalities,
becomes even more powerful by extending its jurisdiction to new areas of human
endeavor, or that the WTO retreats, thus creating the space for countries to
follow strategies of economic development that are compatible to their needs.
Talk is cheap. It is worse when government goes back on its words once
powerful external forces turn on the heat. In recent discussions around Asean
Free Trade Area (AFTA) tariff reductions, for instance, government
representatives at first promised some sectors of Philippine industries
threatened by tariff reductions that it would not bring down most tariffs to 0-5
per cent by 2003, only to tell the press the next day that it would, in fact,
bring down the tariffs to that level next year. With government speaking
at both ends of its mouth, people are right to ask if they can really trust
Trade and Industry Secretary Mar Roxas and the traditionally weak government
negotiating team to represent Philippine interests in the infinitely harder WTO
negotiations in Cancun.
Even assuming that the political will is there to challenge the WTO and
the big trading powers, it will take a multi-pronged strategy to defend the
Philippines’ interests during the ongoing negotiations in agriculture,
services, and industrial tariffs and during the Cancun ministerial.
Elements of a Strategy
In the absence of government leadership, we in civil society have taken
the initiative in formulating a strategy. The three key points of a
Philippine agenda must be:
-
opposition to a new
round of WTO trade negotiations.
-
opposition to further
WTO trade and trade-related liberalization.
-
opposition to the
incorporation of the “new issues” of investment, competition policy,
government procurement, and trade facilitation into the WTO agenda.
In addition, we advance the following demands:
-
In agriculture,
unilaterally extend the quantitative restrictions on rice imports and formulate
a stand in the agricultural negotiations that is independent of the Cairns
Group. The centerpiece of this position should be the withholding of our
approval from any revised agreement that does not give our country the right to
restrict market access in key crops, the right to make food security and food
self sufficiency central principles of its agricultural trade policy, and the
sovereign right to determine its agricultural and food policy. If that means
stalemating the negotiations on the AOA by preventing consensus, so be it.
-
Oppose extension of WTO
jurisdiction to fisheries as part of a strategy of conserving and developing
fisheries primarily to meet domestic needs, and work for a fisheries policy that
restricts trade and foreign investment damaging to fisherfolk livelihoods and
destructive of marine ecosystems.
-
Demand the freezing of
negotiations in services on the grounds that GATS
subverts the Constitution and foreign investment laws.
-
Demand the freezing of
negotiations on industrial tariffs on the grounds
that this is a mechanism for dumping cheap industrial goods, leading to job loss
and greater poverty in developing countries. This step must be taken within the
broader context of an industrial and development framework to be developed after
a comprehensive study carried out in collaboration with concerned sectors. Trade
instruments and international trade agreements should serve and promote national
development objectives.
-
Oppose the drive of the
US and other developed countries to undermine the Doha Declaration provision
allowing developing country governments to override the Trade-Related
Intellectual Property Rights Agreement (TRIPs) Agreement in the interests of
public health, stop all efforts to extend patents to life and traditional
knowledge, and prevent monopoly of technological diffusion by transnational
corporations.
-
Work with other
developing countries to prevent the launching of a new
round of trade liberalization in Cancun. Stand firm on the Chairman’s
statement that there is as yet no authority to begin negotiations on the new
issues. Refuse to provide the explicit consensus for the start of negotiations
on investment, competition policy, and government procurement.
-
Coordinate work in
defending Philippine national interests in the WTO negotiations and in other
multilateral negotiations, particularly in the Asean Free Trade Area (AFTA).
There
is very little time left to craft a strategy to promote our national interests
within the WTO. The Arroyo administration must prove for once that it has the
will to defend our national interests, the imagination to rally a multi-nation
defense of common interests, and the stamina for a tough campaign. Let it not
demonstrate once more, as is the tradition of reactionary Philippine politics
and diplomacy, that its bark is fiercer than its bite.
SIGNED:
Organizations:
Action
for Economic Reforms (AER)
Akbayan!
Citizens Party
Alliance
of Progressive Labor
Alternate
Forum for Research in Mindanao
Bayanihan
International Solidarity Secretariat
CARET
Confederation
of Independent Unions in the Public Sector
Focus
on the Global South
Focus
on the Global South – Philippine Programme
Integrated
Rural Development Foundation (IRDF)
Kalayaan
Kilusang
Mangingisda
Labor
Education and Research Network (LEARN)
Pambansang
Katipunan ng mga Samahan sa Kanayunan (PKSK)
PARRDS
Peoples’
Global Exchange (PGX)
Philippine
Peasant Institute (PPI)
Philippine
Rural Reconstruction Movement (PRRM)
Sanlakas
SEARICE
Tambuyog
Development Center (TDC)
Individuals:
(Organizations
are for identification purposes only)
Jessica
Reyes-Cantos
(Office of Rep. Del de Guzman)
Prof.
Rene Ofreneo
(UP School of Labor and Industrial Relations)
Prof. Miriam Coronel Ferrer
(Third World Studies Center)
Prof. Perlita Frago
(Third World Studies Center)
Verna Dinah Viajar
(Third World Studies Center)
Sharon Quinsaat
(Third
World Studies Center)