Focus on the Global South- India - Petition: Reject Pressure to Give Bush Fast Track Authority to Push WTO

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.