Makings of A Round That will be Catastrophic for Poor

The outcome of the arm-twisting, opaque and exclusionary process of negotiations is a framework that protects the interests of the strong.

In agriculture, the framework is a legal instrument for the US and EU to maintain their subsidies. It is nothing but a box-shuffling exercise, even as developing countries’ markets are forced open.

In industrial tariffs, some room is provided for the Cancun text which was adopted and which strongly favours developed countries’ interests, to be reopened and negotiated. However, according to Aileen Kwa, policy analyst with Focus on the Global South, “In order to dilute it in the future, the fight ahead would be so much harder since the entire annex is a rendition of rules to tear open developing countries’ markets in a manner that will benefit US and EU industries, but which the African, Caribbean and Pacific countries have already said will cause deindustrialisation.”

In trade facilitation, developing countries gave in to taking on heavy commitments when resources should be devoted to more pressing and immediate concerns.

Says Kwa: “All in all, the text is a raw deal with the South. It is the makings of a Round that will be catastrophic for the poor.”

Details of arm-twisting, divide and rules strategies as well as the exclusionary process that marginalized the majority are attached below.

Aileen Kwa
Focus on the Global South
Tel: 41 79 3713774

Arm-Twisting, Divide and Rule Tactics and Exclusion
Corrupted WTO Talks

Aileen Kwa
Focus on the Global South
1 August 2004

Arm-twisting, bribes, inducements and threats by the powerful nations, as well as a totally non-transparent, exclusive process corrupted the outcome of the WTO trade talks and the ability of developing countries to sustain their positions. These were some of the instruments used:


Withdrawal of Aid
Kenya is one of the most vocal African countries in the WTO championing the cause of developing nations. Just days before the July WTO meeting, the EU withdrew aid (on 21 July), to the tune of US$60.2 million. The reason given was the “prevailing governance situation in Kenya”, because of the way the government had handled a corruption case. Informal sources have speculated that the EU did not want Kenya to be “too confident” at the meeting.

This is in line with the UK Trade Minister Patricia Hewitt’s acknowledgement that “The UK is using its influence to persuade developing countries that a deal is in their interest”.

Taming the Africans With AGOA III
AGOA is a major inducement for some key African countries. African exports to the US increased by 55 per cent. Kenya’s exports to the US under AGOA, for example, trebled from $45 million in 2001 to $150 million by 2003. Under AGOA II, African countries’ ability to import fabric and yarn from countries other than the US was to expire in September 2004. This was a major worry for the African countries since most can no longer locally produce their own cotton (due to US subsidies) and imported yarn from the US is too expensive.

Timed at exactly two weeks before the July WTO meeting, President Bush signed into law the AGOA III legislation on July 13 extending the provisions of the Africa Growth and Opportunities Act (AGOA) from 2008 to 2015. The legislation makes provision for African countries to continue importing "third party" raw materials for another three years. This was packaged as a major concession to African countries such as Kenya. Two proponents of the cotton initiative are also AGOA recipients – Benin and Mali. The other countries that are eligible to export textiles to the US under AGOA include Ghana, Lesotho, Madagascar, Malawi, Mauritius, Mozambique, Niger, Rwanda, Senegal, South Africa, Tanzania, Uganda and Zambia.

Millennium Challenge Account
The Millennium Challenge Account – a development assistance fund – first mooted by Bush in 2002, kicks into effect in 2004, and has been used as another carrot. The MCA provides $1 billion of aid to 16 developing countries in 2004. During the week of the WTO talks, faxes were sent by the US to certain recipient countries, reminding them that they will be given this aid. WTO member countries who have been selected as recipients include: Benin, Bolivia, Ghana, Madagascar, Mali, Mongolia, Mozambique, Honduras, Lesotho, Nicaragua, Senegal and Sri Lanka. Significantly, two of the “cotton” proponents are also part of this list – Benin and Mali.

Quota Allocations for Sugar
Sugar is a significant export commodity for some countries. On 23 July, a week before the July meeting, US announced its sugar quota allocation for 40 countries. This system allows these countries to export a fixed quota to the US at a lower tariff rate. The largest recipients were the Dominican Republic (185,335 metric tons) followed by Brazil (152,691 metric tons), Philippines (142,160), Australia (87,402), Guatemala (50,546), Argentina (45,281).

Visa Waiver
Negotiations on visa waiver to the US was completed only in the first week of July. The visa waiver was granted to Nigeria.


US “Food Aid”
Elimination of export subsidies were supposed to be a big concession by the EU in at this meeting. However, the EU offer is extremely weak, conditioned upon US’ discipline on food aid. The US in turn resorted to threats in order not to have its practice of dumping food surpluses changed.

The 16 July text had said that food aid should not be used as a mechanism for “surplus disposal”. The implication is that food aid should be given in grant form. That is, US’ PL480 programme where loans are given to countries in terms of food at a time convenient to the US had to be disciplined. In response to this, the USTR wrote to all the countries which are recipients of the PL 480 asking them to speak up against the language in the text. The implied message to them was that with that language, they would cease to get food aid from the US. This led to LDCs as well as several other countries, such as Mongolia, breaking ranks with developing countries and taking sides with the US.

Japan’s Bilateral Aid
Japan also pressured countries which were beneficiaries of its bilateral aid programmes. In the first week of July, Japan sent a delegation to Geneva to meet other member countries. The Japanese told those receiving their aid – mainly Asian countries- that they were not to go against Japan’s offensive interests, including dropping the three Singapore issues (investment, competition, transparency in government procurement) from the WTO agenda. Aid recipients were told that support given for their infrastructural development could otherwise be at stake. This led to countries taking the softer position – that the three issues should be dropped from the Doha Work Programme, but still be retained in the WTO.


Exclusion and a Take-it-or-leave-it Process
For the first half of the week, the main negotiations – agriculture – were held only amongst 5 members, US, EU, Australia, Brazil and India, the so-called non-group of five (NG5). This left many delegations groping in the dark. But more importantly, for developing countries, the main decisions were left to the judgment of Brazil and India. The Agriculture Chairman, New Zealand’s Ambassador, Tim Groser blithely said that he was receiving “political guidance” from the five “interested parties”. As one developing country delegate exclaimed, “We are all interested parties!” Zambia’s Ambassador Love Mtesa characterized the situation: “You are kept out of the picture and you only depend on hand-outs from time to time…Talks like that should be taking place in a public gallery. There are serious gaps and they need to be properly addressed.”

The revised 30 July draft was the work of the Groser, emerging from the informal and unrecorded discussions in the NG5. The exclusion severely disadvantaged the majority of developing countries from insisting on their positions

The 30 July draft was then further discussed by a group of 20 countries in a green room that ran from the evening of Friday 30 until 8am on Saturday morning. The 20 countries emerged endorsing the draft. The amendments they made were brought back to the various groups – Africa Group and LDCs, G20 and G33. However, in that pressure cooker environment, and with countries told that the more influential developing countries (in the G20) had already accepted the text, rejection by a small player was extremely difficult.

The agriculture text was thus given the seal of approval, even though the text was blatantly protecting the subsidies of US and EU.

Intense Pressures Behind Closed Doors: Cotton
Combined with inducements and bribes, the other tactic was pushing developing country negotiators to the point of exhaustion and subjecting them to pressures behind closed doors. The Ministers from Benin, Burkina Faso, Mali and Chad, proponents of the Cotton initiative had been invited to stop in the United States before their arrival in Geneva. Cooperation with the US was promised in the areas of biotechnology and other technical assistance programmes.

On Wednesday 28 July, Benin representing the group called for a press conference to highlight their expectation that cotton would be dealt with expeditiously. They said they had shown flexibility by agreeing to move cotton into the agriculture negotiations, but wanted it to be dealt with on a fast-track. On Thursday 29 July night, the four Ministers were called into consultation with USTR Zoellick. The meeting lasted until 4am on Friday morning when some “compromise” was reached. After these talks, the 30 July draft was then issued at 7am. The text was no different from the old one – which accommodates the US position of giving $3.7 billion to 25,000 farmers, but did not offer any protection to the 12 million West African farmers. The only difference was the promise that the WTO would set up a sub-committee on cotton to review the situation!

In the Heads of Delegation meeting on Friday, Benin spoke in favour of the text! That evening, another press conference was convened by the cotton proponents. This time, the Benin spokesperson was nowhere in sight. Instead, Senegal’s new trade Minister spoke on their behalf, welcoming the new text.

No Time to Study the Text Or Consult With Capitals
The final text emerged at about 8pm on July 31. A Heads of Delegation meeting took place at 10pm. Delegates did not have enough time to revert the text back to capitals, or consult with their experts. The text was adopted at midnight. Clearly, the process was so rushed that there was no time for negotiators to fully study the text, and much less allow for constituencies at home to properly debate it.


Breaking the Africa Group Unity
The Africa Group has been subjected to various forms of divide and rule tactics. One LDC negotiator said that some African member countries had been co-opted, and were instrumental in breaking the Africa Group unity. “The Group has been penetrated. They have worked on certain people in Geneva and they were used to confuse the Group. So it was difficult to have consensus in the G90 and the Africa Group. For example, on cotton, some Ambassadors had been co-opted and told by others not to be disruptive.”

There was also careful selection of the composition of countries that would come together for consultations. Those orchestrating the meetings invited African countries that had already changed their position from their Cancun stand and put them with those that were vehemently opposed. Getting the two groups together in consultations contributed to the breakdown of the Africa Group. It also lowered the morale of the Group. According to a delegate “What they (the powerful countries) are doing to Africa Group is very bad. They are trying to break them up. They have small group meetings and pick the African countries which are very strongly against the NAMA text, and put them in one room with those (other Africans) that are very flexible. This is the tactic. Of course since they are from the same region, if one saying yes, another no, it does not help African unity.”

Excluding the Outspoken in the Decision-making Process
In the second half of this week, the main negotiations took place in Green Room meetings of about 20 countries that lasted into the morning. Again, delegates said that those representing Africa had been carefully selected.

"The representation issue is playing a role. Some of the more vocal countries have not been invited to the green room. They are trying to make sure that we don’t speak anywhere. The Africa Group for instance was represented by Mauritius and Morocco on trade facilitation. Those are not countries on our side. That is why things are not going well. That is their strategy."

* Aileen Kwa is a trade policy analyst with Focus on the Global South. She was in Geneva throughout the negotiations.