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Strategy paper on
commodities 
(489kb)
Developing
Countries & WTO
Developing
countries have much to gain from trade. The available
evidence suggests that open economies have faster growth
rates than closed economies. Although the precise figures
obtained from studies may be open to challenge, there
is no evidence to suggest that closed economies grow faster
than open ones.
Gains
for developing countries do not come solely through improved
access for their exports. Liberalisation by developing
countries themselves is just as, if not more, important.
Competitive domestic markets are a necessary condition
for improving their rate of growth.
Trade
liberalisation does not automatically imply higher growth.
It will have little benefit if the domestic policy environment
is inadequate. Weak economies need to build simultaneously
the institutional and human infrastructure to take advantage
of trade opportunities. Hence, the need for a coherent
approach amongst the international organisations to best
enable them to do that.
Developing
countries have much to gain from further liberalisation.
On average, manufacturing exports from developing countries
to developed countries face an effective tariff 4 times
higher than that on exports between developed countries.
They would also gain from lower tariffs on trade between
themselves, which are currently far higher than those
in developed countries. In a study published by the EU
Commission, of the $400 billion gains from liberalisation,
developing countries would gain $140bn a year; more than
the EU ($92bn) and the US ($45bn).
Research
shows that trade liberalisation generally helps to alleviate
poverty. In East Asia increased openness led to higher
wages and lower poverty. In general, trade openness has
beneficial effects on productivity, the adoption and use
of new technology and investment. It is through these
channels that trade stimulates economic growth and provides
the resources necessary for reducing poverty. If poverty
increases after trade liberalisation, it is because of
failures in the domestic market and the best policy is
to correct those. The virtue of trade liberalisation is
as part of a package of measures to strengthen markets
- promoting greater use of the market, more stable and
less arbitrary policy intervention, stronger competition
and macro-economic stability. Studies acknowledge that
some can lose in the short run from liberalisation. The
plight of the losers should not be ignored, but the right
way to alleviate their hardship is through social safety
nets and job retraining rather than abandoning reforms
that benefit most people.
WTO
Trade
Ministers from 142 countries successfully secured the
launch of a new Round of world trade negotiations at the
4th WTO Ministerial Conference, in Doha, in
November. The ‘Doha Development Agenda’ combines the launch
of a broad new round of trade negotiations with a package
of measures specifically focused on the needs of developing
countries
Developing
countries stand to benefit the most from successful WTO
negotiations launched at Doha. It has been estimated that
halving protection in agriculture, industrial goods and
services could boost developing country incomes by around
$150bn a
year - three times the value of all aid budgets put together.
According to the World Bank, substantial trade liberalisation
could reduce the number of people living in poverty by
over 300m by 2015. That is why the UK Government continues
to believe that free and fair trade offers one of the
best means of helping the poorest people in the poorest
countries.
A
development focused trade round offers the best opportunity
for many people in developing countries to escape from
poverty. We believe that the Doha Development Agenda could
mark a major step forward in the war on poverty. The lowering
of trade barriers of particular significance to developing
country exporters should help to stimulate their economic
growth.
The
package that we have agreed can bring real, and in some
areas brings immediate, benefits to developing countries.
The clarification of existing WTO intellectual property
rules, has reassured developing countries that they can
take action to protect public health during crises, without
compromising the incentives required to ensure that new
drugs are developed for the future. We have agreed on
steps, both immediately and in the next year, that address
developing countries' concerns over the implementation
of the existing WTO agreements. Of enormous concern to
more that 50 of our WTO colleagues, including some of
the poorest countries in the world, we have ensured that
the European Union can continue to give preferential treatment
to imports from African, Caribbean and Pacific countries
under the Cotonou Agreement.
The
Declaration, responding to the requests of developing
countries, commits WTO Members to taking development needs
into account, both in policy terms (such as flexibility
and commitments commensurate to level of development)
and also concerning capacity building and technical assistance.
Implementation
In
the run up to the WTO Ministerial in Seattle, a number
of developing countries tabled proposals to tackle what
they saw as the imbalances in the outcome of the Uruguay
Round. Although many of the proposals tabled involve changes
to existing Agreements, which would necessarily require
re-negotiation, they were tabled under the heading of
implementing the outcome of the Uruguay Round and have
therefore been referred to ever since as the "implementation"
proposals.
Post-Seattle,
more issues were added until well over a hundred separate
proposals were under discussion. Although a few proposals
were agreed in the summer of 2001, it was only at the
WTO Ministerial in Doha where substantial progress was
made. Nearly fifty proposals were addressed in the Doha
Ministerial Decision
on Implementation-Related Issues and Concerns, either
agreed outright or subject to some specific further work.
The Doha Declaration
(paragraph 12) remitted the other fifty or so proposals
to WTO committees for further work.
Special
and Differential Treatment
Special
and Differential Treatment is the term used for the way
in which developing countries are treated differently
to developed countries within the WTO system.
Examples
of Special and Differential Treatment include giving developing
countries longer time periods than developed countries
in which to implement WTO Agreements, providing technical
assistance to developing countries to implement specific
WTO Agreements and providing preferential market access
(through such schemes as the Generalised System of Preferences
or the Everything But Arms initiative) which is non-reciprocal
and available to many developing countries but not to
developed countries.
The
Doha Ministerial (in paragraph 44 of the Ministerial Declaration,
cross-referenced to paragraph 12(i.-iii.) of the Ministerial
Decision
on Implementation-Related Issues and Concerns) mandated
further work on Special and Differential Treatment, specifically
a review of existing provisions with a view to strengthening
them and making them more precise, effective and operational.
Technical
Assistance and Capacity-Building
The
Doha Ministerial stressed the importance of technical
assistance and capacity building for developing countries
in order to ensure that developing countries can participate
fully in the WTO and take full advantage of the opportunities
offered to them by their membership of the WTO.
Post-Doha,
the WTO Secretariat prepared and WTO Members have agreed
a Technical Assistance Plan for 2002, which is intended
to begin addressing developing countries' concerns. The
Plan includes such activities as visits by members of
the WTO Secretariat and regional seminars on WTO issues.
Much of the work being carried out under the Technical
Assistance Plan is funded by contributions made at a Pledging
Conference on 11 March 2002 to the Doha Development Agenda
Global Trust Fund (DDA GTF). The UK pledged £1m to the
DDA GTF at this conference.
More
broadly, the UK has committed £45m to trade-related technical
assistance and capacity building activities.
TRIPS
and Public Health
In
the run up to Doha, the issue of access to medicines emerged
as a trade issue, given concerns in some quarters that
the WTO Agreement on Trade Related Intellectual Property
Rights (the TRIPS Agreement) was raising the prices of
medicines available to developing countries.
At
Doha, agreement was reached on a Declaration
on the TRIPS Agreement and Public Health, in which
WTO Ministers agreed that the TRIPS Agreement neither
does nor should prevent WTO Members from taking measures
to protect public health and affirmed that the TRIPS Agreement
can and should be interpreted and implemented in a manner
supportive of WTO Members' right to protect public health
and to promote access to medicines for all. Moreover,
the Declaration reaffirmed the right of WTO Members to
use, to the full, the flexibilities within the TRIPS Agreement
for this purpose.
Beyond
this, WTO Ministers also instructed the TRIPS Council
to find a solution to the problems faced by WTO Members
with insufficient or no manufacturing capacities in the
pharmaceutical sector in making effective use of compulsory
licensing under the TRIPS Agreement.
Intellectual
Property Rights and Development
Following
publication of the White Paper of December 2000 entitled
Eliminating World Poverty - Making Globalisation Work
for the Poor, the Government set up a Commission to
investigate the issues relating to intellectual property
rights and development more generally. The Commission
reported in September 2002 and the Government response
was published in May 2003. Both the Commission's report,
entitled Integrating Intellectual Property Rights and
Development Policy and the Government's response to
that report can be accessed on the DFID
website.
Trade
Debt and Finance
At
the Doha Ministerial it was agreed that the WTO
would set up a working group to examine the relationship
between Trade, Debt and Finance and to report findings
to the Fifth Session of the Ministerial Conference.
Issues
relating to Trade, Debt and Finance cover several policy
areas and fall under the mandate of different institutions.
The key role of the WTO in this is to ensure coherence
and promote information exchange.
The
U.K. is supportive of this initiative but is keen to ensure
that the group concentrate on coherence across international
body agreements.
Transfer
of Technology
At
the Doha Ministerial it was agreed that the WTO
would set up a working group to examine the relationship
between Trade and Transfer of Technology and to report
findings to the Fifth Session of the Ministerial Conference.
Technology
transfer has been an issue in some parts of the WTO (such
as TRIPS), and before that in the GATT and in a great
many other international negotiations (especially environmental
negotiations) for many years. The key issue is essentially
the difference of approach to technology transfer taken
by developed and developing countries. Some see technology
transfer as taking place implicitly through routine trade
relations, and especially through foreign direct investment
(FDI) - countries should therefore create the conditions
in which FDI can take place (stable regulatory environment,
intellectual property protection etc) and technology will
follow trade. Others would prefer a more explicit approach
with companies being pushed into transferring technology
(rather than pulled to a suitable location for FDI) on
concessional terms. How we bridge this gap is the key
to a positive outcome.
Small
economies
At
the Doha Ministerial it was agreed to establish a work
programme to examine issues relating to the trade
of small economies with the intention of promoting fuller
integration of small, vulnerable economies into the multilateral
trading system.
The
work programme on small economies will be a standing item
on the General Council agenda and recommendations for
action are to be made to the Fifth Session of the Ministerial
Conference.
Least
Developed Countries
The
Doha Ministerial instructed the sub committee for Least
Developed Countries (LDCs) to report on an agreed work
programme. This was presented to the General Council in
February 2002 and commits the Committee to focus on:
- Market
access;
- Trade
related technical assistance and capacity building;
- Providing
support to agencies assisting with diversification;
- Mainstreaming
trade;
- Participation
of LDCs in the multilateral trading system:
- Accession
of LDCs to the WTO; and
- Follow
up to Ministerial decisions/declarations.
The
UK is also party to a number of other non WTO
initiatives aimed at promoting better integration of developing
countries into the world trading system.
For further information on all of the above, please contact:
Andrew
Dey
Tel. 020 7215 4435
Fax. 020 7215 4539
E-mail. andrew.dey@dti.gov.uk
Economic
Partnership Agreements (EPA)
EPAs
will be at the heart of the economic and trade cooperation
pillar of the Cotonou Agreement (an international agreement,
between the EU and the African, Caribbean and Pacific
countries).
EPAs
will come into force by 2008 and will progressively remove
barriers to trade between the EU and 77 African, Caribbean
and Pacific (ACP) countries. EPAs will be fully WTO compatible
and will therefore put trade relations with the ACP countries
on a secure and sustainable footing, as well as contributiong
to regional integration.
The
aim of economic and trade cooperation is to foster the
smooth and gradual integration of the ACP countries into
the world economy, thereby promoting sustainable development
and contributing to poverty eradication in ACP countries.
For further information on all of the above, please contact:
Zhada Bibi
Tel. 020 7215 4552
Fax. 020 7215 4539
E-mail. zhada.bibi@dti.gov.uk
GSP
The
Generalised System of Preferences (GSP) aims to encourage
developing countries exports by allowing their products
preferential access to the markets of developed countries.
Although donor countries are under no obligation in international
law to give preferences, almost all developed countries
operate GSP schemes; however, the schemes they offer vary
significantly. The UK is party to the EC GSP which is
operated by all EC Member States. The current scheme was
agreed on 10 December 2001, the Regulation published in
the Official Journal on 31 December 2001 and came into
force on 1 January 2002.
The
GSP allows non-sensitive goods into the EU duty free.
In the "sensitive" category a flat 3.5% percentage point
reduction in tariff rates is applied to the Most Favoured
Nation (MFN) rate. There are additional preferences for
ANDEAN, Central American countries and Pakistan to encourage
alternative business opportunities that will allow them
to diversify out of drugs. Special incentive arrangements
are also available for countries complying with certain
labour and environmental standards.
For further information on all of the above, please contact:
Pam Brown
Tel. 020 7215 4542
Fax. 020 7215 4539
E-mail. pamela.brown@dti.gov.uk
EBA
The
Everything But Arms initiative allows all goods, except
for arms from the 49 Least Developed Countries (LDCs)
to enter into the EU duty and tariff free. Three categories
of goods – rice, bananas and sugar - were given longer
implementation periods, but this means that the LDCs now
have duty free access to the EU market for goods they
produce. The EBA initiative is an integral part of the
GSP regulation.
For further information on all of the above, please contact:
Zhada
Bibi
Tel. 020 7215 4552
Fax. 020 7215 4539
E-mail. zhada.bibi@dti.gov.uk
Commodities
Commodity
dependence is a key factor in the economies of a significant
number of developing countries with more than 50 developing
countries depending on 3 or fewer commodities for over
half of their export earnings. Many commodities are experiencing
their lowest price for many years and this is resulting
in immense hardship in these producing countries.
In
response to this situation Patricia Hewitt, Secretary
of State for Trade and Industry hosted a high level meeting
with industry, NGOs, Government Departments and International
Organisations. This has resulted in the formation of an
Industry/Government working group that will contribute
to the Government strategy paper on commodities.
Strategy
paper on commodities
(489kb)
The
UK is actively involved in the work of the Common Fund
of Commodities, and DTI provides the UK Governor and Alternate.
The UK also plays a part in a range of commodity bodies
either as an individual member or through EC membership.
Zhada
Bibi
Tel. 020 7215 4552
Fax. 020 7215 4539
E-mail. zhada.bibi@dti.gov.uk
Last
revised on 23 October 2003
