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)

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