Oxfam Briefing Paper

7
Is the WTO serious
about reducing
world poverty?
The Development
Agenda for Doha

This briefing outlines the issues which the WTO should address
if it is to make an effective contribution to poverty reduction in
developing countries. The paper, prepared in advance of the
Ministerial Conference in Doha, argues that 1) Uruguay Round
outcomes were unfair to poor countries, 2) Ministers should
therefore commit the WTO to rebalance present agreements and
address specific implementation measures, and 3) new issues
should not be added to the existing negotiation agenda. The
decisions at Doha will be an acid test for rich-country
commitment to development and for the legitimacy of the WTO.
Introduction
The prospect of recession in the world economy is throwing a dark
shadow over the developing world, dashing hopes for better
livelihoods. For more than a billion poor people, the opportunities for
making a decent living were already negligible. The need for the
world trading system to be managed in the interests of poorer people
and countries is therefore greater than ever.
Regrettably, in the two years following the breakdown of the Seattle
summit, the richer members of the World Trade Organisation (WTO)
have signally failed to respond to this need. And now, the draft
declaration for the Doha ministerial conference, issued on 26
September, reinforces fears that the powerful trading nations are once
again mouthing ritual phrases about sustainable development while
steadfastly pursuing the narrow commercial interests of their large
corporations. This short-sighted policy not only threatens the
livelihoods of people in poverty but also jeopardises the multilateral
management of trade by alienating the developing countries, which
make up the majority of the WTO membership. The least-developed
countries (LDCs) have already made clear that the declaration does
not adequately take into account their interests and views. A number
of other developing countries have expressed similar
disappointment.
Oxfam hopes that the industrialised countries will come round to the
view that development must be the driver of trade policy. Doha is the
litmus test for their intentions. This briefing paper, which is intended
for people involved in trade policy making, economic journalists, and
the interested public, sets outs the issues which Oxfam believes the
WTO must resolve at the conference and address over the coming
years, if it is to make an effective contribution to poverty reduction.

Summary of Oxfams position

The Uruguay Round trade agreements were unfair to poor countries.
Rich countries have not implemented many parts of those agreements
that might have been good for development.
The WTO Ministerial Conference in Doha should therefore agree
specific implementation measures, and commit the WTO to rebalance
the existing agreements over the next two years.

2 Is the WTO serious about reducing world poverty?

The industrialised countries should make immediate commitments to
grant full market access to least-developed countries, phase out
agricultural export subsidies and review the intellectual property
agreement (TRIPS).
The WTO agenda over the next two years should focus on reform of
agricultural trade with a view to enhancing food security, on
improved access to Northern markets for all developing countries,
and on rebalancing the TRIPS agreement so that it better serves the
public good.
The services negotiations underway should be based on voluntary
commitments by developing countries, by sector, and without
external pressure to liberalise.
It is not in the interests of development to add new issues to the WTO
agenda now because it would distract from this unfinished business
and over-stretch the negotiating capacity of poorer countries.
Moreover, further study of the impact of the Uruguay Round is
needed before embarking on further liberalisation.

Premises
Oxfams position starts from the following premises:
International trade can be a force for poverty reduction by
overcoming scarcity, and by creating livelihoods and employment
opportunities, but this is not an automatic process. Trade
liberalisation is not a panacea for poverty, any more than
protectionism.
A multilateral, rules-based trade system is needed to manage
trade in the interests of sustainable development. The WTO is a
central component of this system the challenge is radically to
improve it.
All WTO negotiations should be guided by the principles of
poverty eradication, respect for human rights, and environmental
sustainability. This implies the need for review of the
social/environmental impacts of the Uruguay Round, and for
forward-looking assessments of any future WTO agreements.

Is the WTO serious about reducing world poverty? 3

The starting point for Doha
The Uruguay Round, and the wider process of trade liberalisation to
date, has not been a fair deal for developing countries. Industrialised
countries have levered open markets in developing countries, often
with high social costs, while keeping their own markets protected
against developing-country exports. UNCTAD has calculated that
rich-country trade barriers cost developing countries US$700bn every
year. These imbalances need correcting.
The rich countries made a number of commitments at the end of the
Uruguay Round which have not been honoured, such as progressive
liberalisation of textile markets, and assistance with trade capacity
building. Some agreements, such as TRIPS, are proving highly
problematic for developing countries and must be reviewed.
Industrialised countries have yet to demonstrate that they are
prepared to put sustainable development before short-term
commercial advantage, or break with the mercantilist approach to
trade negotiation. Developing countries lack confidence in the
political will of the major trading nations to do things differently.

The development agenda for Doha

The Doha Ministerial and the work programme it defines should
address the unfinished business of the Uruguay Round, i.e. the
fulfilment of previous commitments to developing countries, and the
re-balancing and review of existing agreements. Worryingly, the 26
September draft Doha declaration does not address this imperative,
suggesting that the industrialised countries have not shifted positions
since Seattle.
There is no mention, for example, of the need for the USA, Canada,
and Japan to grant full access to their markets for the LDCs, which
continue to be marginalised from world trade. This measure has long
been considered a key test for whether the industrialised countries
are serious about making trade work for poverty reduction. In the
case of the European Union, minor concessions on market access for
LDCs were only obtained after a major battle, revealing just how little
the powerful nations seem prepared to allow trade to work for poor
countries. The declaration is also silent on the need to review the
TRIPS agreement from a development and public-health perspective.
Ambassador Ali Mchumo of Tanzania, speaking on behalf of the
LDCs, described the section on TRIPS as extremely disappointing.

4 Is the WTO serious about reducing world poverty?

In our view, he continued, it is basically empty of content, ignoring
the evidence of problems generated in recent years. Given this lack
of response from rich nations to issues of vital concern to the poorest,
the demand from many developing countries that there should be
'down payment' by the industrialised countries, prior to the launch of
any round, seems extremely reasonable.
Oxfam, together with most developing-country governments, wishes
to see the following specific outcomes of the conference.

Agreement now on the following five key points

1 A commitment by rich countries to provide tariff/quota-free
access for all LDC exports by 2003
2 A commitment by rich countries to phase out agricultural export
subsidies by 2003
3 An agreement on a binding, pro-public health interpretation of
TRIPS and a commitment to revision of the agreement
4 An agreement on stopping protectionist abuse of anti-dumping
rules by rich countries, notably the USA
5 A commitment by rich countries to increase substantially the
funding of trade-related technical assistance and capacity-
building.

A commitment to achieve the following

objectives over the next two years
Agriculture
- elimination of all forms of export support by industrialised
countries and reduction of other trade-distorting subsidies.
- recognition of the right of developing countries to protect and
promote domestic food production as part of their national
food-security strategies.
Market access
- greater access to rich-country markets for developing-country
exports, especially in the agricultural and textiles/clothing
sectors.
- priority given to reducing tariff peaks and escalation, but also
protectionist use of non-tariff barriers addressed (e.g. rules of
origin and sanitary standards).

Is the WTO serious about reducing world poverty? 5

 Intellectual property:
- revision of TRIPS to give developing countries greater choice
about if and when to introduce high levels of intellectual
property protection in pharmaceuticals and other sectors.
Services:
- ensuring that services negotiations are based on voluntary
commitments by developing countries, by sector, and without
external pressure for hasty or ill-considered commitments.
- agreeing liberalisation in areas of interest to developing
countries, such as the movement of natural persons.
Other implementation issues, including:
- extending transition periods for compliance with existing
agreements, e.g. TRIMS (on investment regulation) and TRIPS.
- revision of the Dispute Settlement Mechanism to make it fairer
for poor countries.
- reviewing the boundaries of the WTO role and its coherence
with other international institutions and conventions.

A comprehensive round and the new

issues?
Oxfam, along with most developing countries, disagrees with the
proposal, spearheaded by the EU, to launch a broad or
'comprehensive' round. Such a round would include not only the on-
going negotiations on agriculture and services but also the
negotiation of new agreements on investment, competition, and
procurement, among other subjects. It would also tie any revisions to
existing agreements into the new round, which developing countries
fear will mean 'paying twice' for the benefits they might derive from
the bargaining. In the current draft declaration, the option of
negotiating investment and competition agreements is still on the
table, although the proposal on procurement has been scaled back to
cover transparency and not market access.
Oxfam opposes the inclusion of these new issues because:
expanding the agenda would over-stretch the capacity of many
developing countries, which are already struggling to participate
effectively in the WTO process and to implement their existing
WTO commitments.

6 Is the WTO serious about reducing world poverty?

 it would distract attention from the unfinished development
business, and increase the risk that developing countries would
end up accepting disadvantageous trade-offs.
based on experience to date, the new agreements would mainly
be about opening up developing-country markets to international
companies, and creating global rules that further straitjacket
national development strategies in developing countries.
Oxfam would support eventual multilateral agreements on new
issues if genuinely developmental, e.g. dealing with corporate
monopoly and restrictive practices, tighter regulation of TNCs, or
control of corruption, although these agreements would not
necessarily be under the wing of the WTO.
One new issue which does appear in the draft declaration and
which may be of interest to developing countries, particularly in Asia,
is lowering industrial tariffs. However, rich countries must be
prepared to offer reductions in protection, such as removing tariff
peaks on textiles, without demanding low levels in developing
countries, many of which have already dropped tariffs unilaterally
under pressure from the IMF and World Bank. Trade facilitation,
which includes the standardisation of customs and taxation
procedures, also appears as a possible issue for negotiation. This
could theoretically bring benefits to developing countries, provided
that financial and technical assistance is provided for
implementation.
Oxfam believes that important discussions on trade and labour
should be led by the ILO, with participation by the WTO, and that the
ILO should be strengthened to deal with enforcement of standards.
Although Oxfam shares trade union concerns about trade
undermining standards, Oxfam believes that labour should not be a
'new issue' on the WTO negotiating agenda, in part because of
legitimate developing-country fears about protectionist abuse.
Oxfam supports the resolution of the status of multilateral
environment agreements in relation to trade rules, and the
incorporation of the 'precautionary principle' into WTO agreements
both measures which do not require a new round. However, there
must be safeguards against protectionist abuse of these provisions.

A narrow round?
It seems unlikely that the WTO member states will agree to launch a
comprehensive' round. If there is a consensus at Doha about a round
i.e. a package of subjects to be negotiated together and agreed in a

Is the WTO serious about reducing world poverty? 7

'single undertaking' it is likely to be for a 'narrow' round. This
would have the agriculture and services negotiations that are already
underway (the so-called in-built agenda) at its heart. Other items
could be put in to the pot, such as industrial tariffs and trade
facilitation, the mandated reviews on TRIPS and the Dispute
Settlement Mechanism, as well as some of the implementation
concerns of developing countries. The developing world rightly
resists both these concerns and the reviews forming part of the horse-
trading of a new round, since they are about injustices from the old
round that need remedying. With or without these items, it is highly
misleading to call such a new round narrow, since agriculture and
services are each enormous topics in their own right.
Oxfams response to this narrow' round proposition is that:
From a development perspective, the decision on whether to
stitch these issues together in a round is essentially secondary.
The key questions are whether the agenda is right, and whether
there is a will to seek development-friendly outcomes.
However, some issues of concern to developing countries, such as
changes to the TRIPS agreement in order to better protect public
health, and other unfinished business of the Uruguay Round,
should be dealt with outside the horse-trading of a round.
There could be some benefits for developing countries in a
narrow round, but only if certain conditions obtain. These
include:
- agreement on the five Doha outcomes listed above - this is the
minimum down-payment that rich countries have to offer in
order to show that they are taking development seriously
- agreements that favour poor countries are made a priority in a
round and should form part of an early harvest
- developing countries are not under pressure to liberalise
vulnerable sectors, especially in agriculture, e.g. staple foods
- services negotiations are based on voluntary commitments,
sector by sector, and without external pressure for
inappropriate commitments
- all agreements should be based on prior assessments of social
and environmental impact and concluded after informed public
debate.

8 Is the WTO serious about reducing world poverty?

Conclusion
Oxfam believes that wide-ranging changes are essential to ensure that
the world trade regime promotes poverty reduction, respect for
human rights, and environmental sustainability. These changes
include reform of trade policies, agreements, and institutions at
national, regional, and international levels, and a fundamental
change of approach by governments.
This paper identifies a number of changes to be initiated at Doha
which will redirect international trade rules in support of poverty
reduction and sustainable development, and rebuild the confidence
of developing countries in the multilateral trading system. If
governments demonstrate sufficient political will, these policy
proposals can be addressed in the short term within the context of
existing WTO negotiations on agriculture, services, intellectual
property, and implementation issues. Until this happens, it is
inappropriate to discuss the launch of a broad round of negotiations
incorporating a range of new issues.
Strong international rules are needed to manage trade, but the
current rules favour the narrow business interests of the powerful
economies and their large corporations, at the expense of poor men
and women. Governments must turn this around, and take action to
place people at the centre of trade policy-making.

Oxfam International 2001

This paper was written by Michael Bailey and Penny Fowler. More detailed
analysis of world trade rules and Oxfams proposals for reform can be
found in Harnessing Trade for Development, published in August 2001
and available at
www.oxfaminternational.org/what_does/advocacy/trade.htm.
This is part of a series of papers written to inform public debate on
development and humanitarian policy issues. The text may be freely used
for the purposes of campaigning, education, and research, provided that
the source is acknowledged in full.
For further information please email [email protected]
Date of report: October 2001

Is the WTO serious about reducing world poverty? 9

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Published by Oxfam International October 2001

Published by Oxfam GB for Oxfam International under ISBN 978-1-84814-457-6

10 Is the WTO serious about reducing world poverty?