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To Combat Global Poverty and Allow Developing Countries to Develop; Please Reject Pressure to Give President Bush New Fast Track Authority to Push WTO Escalation Via the Doha Round
March 29, 2007
Dear Member of Congress:
We would like to congratulate you on becoming the majority party in the U.S. Congress. From press reports, we understand that thanks to your election, your Congress now more accurately represents the majority of U.S. public opinion regarding globalization, among other issues. We also understand that many of you were elected by your citizens on the basis of rejecting the failed NAFTA-WTO globalization model. We appreciate your criticisms of these failed policies, the negative results of which have been devastating for our communities as the same policy package has been imposed in poor countries by the International Monetary Fund and World Bank for decades.
As members of civil society from every region, we are heartened to hear
that Democrats are talking about a New Direction on trade policy. We
are writing to share our view that this New Direction must include
rejection of the current attempts to expand the failed World Trade
Organization (WTO) through the "Doha Round." We are unified in our
commitment to an entirely new vision and policy for multilateral trade
that would benefit, rather than damage, the world's workers, farmers,
environment, and future development potential. Therefore, we urge you
to reject pressure by U.S. corporate giants and other WTO proponents to
renew Fast Track for WTO negotiations.
The proponents of the WTO cynically dubbed the WTO expansion launched
in Doha, Qatar in 2001 the "Doha Development Agenda," but in developing
countries this proposal is called the "Everything but Development
Round." That is because the results of the past twelve years of living
with the results of WTO policies have resulted in worsening economic
conditions for the majority. The number and percentage of people living
on less than $1 a day in regions with some of the worst forms of
poverty - Sub-Saharan Africa and the Middle East - have increased since
the WTO began operating1 while the number and percentage of people
living on less than $2 a day has increased at the same time in these
regions, as well as in Latin America and the Caribbean.2
Meanwhile, projections by the World Bank, the Carnegie Endowment for
International Peace (CEIP) and Tufts University show that the Doha
Round would result in net losses for the vast majority of developing
countries. The most likely Doha scenario the World Bank reviewed would
yield benefits of only $16 billion for developing countries by 2015 -
that is a little less than one cent per person per day to the
developing world. Worse, the research revealed under the "likely" Doha
scenario, the Middle East, Bangladesh, almost all of Africa and
(notably) Mexico would actually face net losses.3 While the majority
would lose, according to these studies, the meager gains would be
concentrated in the largest developing countries, such as China, Brazil
and India.
Using more sophisticated modeling techniques, the CEIP report further
showed that the alleged gains that are projected to accrue to the
biggest developing country "winners" - Brazil and India - would be
largely concentrated in those countries' agribusiness and manufacturing
industries respectively, while subsistence farmers - a much larger
percentage of the populations in general and of the poor specifically -
would see tiny gains or in many cases net losses.4
There are severe problems for developing countries with all three of
the principle areas of negotiation in the Doha Round: agriculture,
non-agricultural market access (NAMA) and services.
* Many developing countries reluctantly agreed to launch the WTO
Doha Round talks to redress imbalances created by the Uruguay Round
agriculture agreement. Those agriculture trade rules have undermined
the livelihood needs of hundreds of millions of farmers worldwide while
benefiting the handful of global grain trading and agribusiness giants
monopolizing this sector. Instead of addressing the growing rural
crisis faced in many countries around the world, Doha Round agriculture
talks have focused on expanding global markets for exporters from
developed and to a lesser extent developing countries. WTO agriculture
rules promote over-production while simultaneously not disciplining
dumping of agriculture products by trading companies using the Uruguay
Round's removal of many countries' supply management systems. This
over-production and the dumping of agricultural exports bought by the
agribusiness giants - often for less than the cost of production in the
United States and Europe - continues to drive down world prices for
crops that the poor depend on, such as cotton, maize, rice, poultry,
dairy, and sugar. This is having a devastating effect on local
livelihoods, as small family farmers and agricultural workers have been
pushed out of the market, and often become displaced and further
impoverished as they lose their land. Simulations by WTO members
illustrate that the Doha Round agriculture offers by the United States
and EU to stop export subsidies and reduce their domestic support will
not alleviate these problems. Meanwhile, U.S. negotiators have outright
rejected the "Group of 33 Proposal" to establish a Special Products and
Special Safeguard Mechanism. This proposal, supported by a broad
alliance of over 100 WTO member countries, is based on established food
and livelihood security and rural development criteria. It would define
appropriate mechanisms for developing countries to safeguard the
majority of their populations - who are farmers - from the distortions
that would result from the Doha Round rules.
* The negotiations on Non-Agricultural Market Access (NAMA) - which
covers industrial good and natural resource tariffs and non-tariff
measures - are projected by the United Nations Conference on Trade and
Development (UNCTAD) to cost developing countries over $63 billion in
revenue, or more than four times the total possible gains to developing
countries projected in the World Bank study!5 In most developing
countries, a quarter to over a third of the basic revenue that is used
to provide essential health and educational services comes from tariff
proceeds. Moreover, tariff cuts proposed by developed countries will
have a significant and detrimental long-term effect on poor countries'
ability to develop diverse industrial bases that can add value to our
natural resources and provide employment and wealth in our countries.
The Congress of South African Trade Unions (COSATU) warns the proposals
could leave countries "seriously de-industrialized," becoming producers
of primary products with the loss of jobs and wealth that value-added
activity entails. While millions of jobs are at stake for many
developing countries, for the poorest countries, the future policy
space to deploy the strategic use of tariffs as a development tool -
just as the United States and all currently wealthy countries did
during their industrialization - would be foreclosed forever if the
NAMA negotiations were to conclude as designed under the Doha Round. In
addition, tariff cuts focusing on natural resources - wood products,
fisheries and more - pose major threats to our world's environment as
they create new incentives for over-exploitation of natural resources.
* The third main focus of Doha Round - service sector privatization
and deregulation - is also anti-development. These negotiations are
aimed at requiring countries to transform their public services into
new tradable for-profit commodities for foreign companies and to
deregulate domestic service sectors to allow foreign corporations to
operate without restriction in domestic markets. Yet most experiences
of services liberalization in developing countries to date - in water,
energy, health, education, the financial sector - have been negative.
In particular public access to privatized services, especially for the
poor, is often diminished while the quality of service is compromised
and local employment declines. Even in your country, with its strong
regulatory systems, relative wealth and operating markets, you have
experienced the devastation such service sector deregulation can cause,
for instance in the case of your California energy crisis and the
growing number of U.S. cities who have had to take back water systems
from for-profit operators.
Because of the past failed record of the WTO, the projections for
future damage, and concerns about the serious anti-development
implications of the current negotiations, the Doha Round must be
suspended permanently. The U.S. Congress can take a key step towards
restoring the standing of the United States as a true multilateral
leader in the international community. We urge you to reject pressure
to renew Fast Track for the WTO, and instead work together with your
trading partners and global civil society for a new multilateral trade
system that benefits all of us.
End Notes:
1. Numbers from Shaohua Chen and Martin Ravaillon, "How Have the
World's Poorest Fared since the Early 1980's?" World Bank Research
Observer, vol. 19, no. 2, 2004, at 152-3.
2. Ibid.
3. See Kym Anderson and Will Martin et. al. "Agricultural Trade Reform
and the Doha Development Agenda," World Bank Report, Nov. 1, 2005;
Ackerman, 2005, at 8 and 9.
4. Sandra Polaski, "Winners and Losers: Impact of the Doha Round on
Developing Countries," Carnegie Endowment for International Peace, 2006.
5. Santiago Fernandez de Cordoba and David Vanzetti, "Now What?
Searching for a solution in WTO Industrial Tariff Negotiations. Coping
with Trade Reforms," UNCTAD, 2005.
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