Wednesday November 21, 2001

Caroline Lucas
Wednesday November 21, 2001

And, finally there is the all important question as to why, despite its own domestic record of resorting to accelerated liberalisation and defending the benefits of freer trade, the National Democratic Alliance (NDA) government, through its representative, Commerce Minister Murasoli Maran, articulated and stuck to a hardline position against a new round, which it gave up only when it was clear that it had been completely isolated by the manoeuvres of the Quad countries, particularly the United States and the European Union members.

The three declarations that have come out of Doha are the 'Doha Development Agenda' for what is in essence a new round of trade talks; the declaration on a set of implementation issues raised by the developing countries; and a 'political statement' on patents and public health. An examination of the three declarations indicate that the developing countries have been able to manage a partial holding operation and even register some gains at the end of the Doha meet.

The principal gain is of course embodied in the political statement dealing with patents and public health. Spurred by the victories won by some African countries by way of clearance to obtain cheap imports of drugs for Acquired Immune Deficiency Syndrome (AIDS), from countries like India which do not as yet recognise product patents and by the expressed willingness of sections in the U.S. to resort to similar imports or compulsorily license the production of ciproflaxcin in the event of an Anthrax emergency, developing countries and a number of non-governmental organisations (NGOs) have been demanding more clearly specified and enhanced flexibility in ignoring clauses of the Trade Related Intellectual Property Rights (TRIPS) agreement and overriding patents for public health reasons. The developed countries have wanted such flexibility to be provided for only in the event of a public health "emergency", such as an AIDS pandemic.

As opposed to this, Brazil, India, the countries of sub-Saharan Africa and some NGOs have been demanding greater autonomy for countries in deciding the public health grounds on which they should be able to resort to such measures. The political statement does go part of the way in providing for such autonomy, besides making special concessions to the least developed countries. Although this does not constitute a formal amendment of the Uruguay Round Agreement, inasmuch as such ministerial-level political statements are taken account of by dispute settlement panels when deciding on complaints of treaty violations, the developing countries have indeed won themselves a victory vis-a-vis the developed countries and the drug multinationals with their headquarters there.

The second, extremely minimal victory for the developing countries is their ability to get the Ministerial Meet to deliberate on and issue a declaration about the more than 40 issues relating to the implementation of the Uruguay Round that had been raised by them over time. All of these focus on the need to modify or reinterpret specific clauses of the Uruguay Round agreement because of its failure to deliver on its promises in terms of benefits to developing countries. However, not much should be made of this 'victory' since, because barring some agreement on the imposition of anti-dumping duties by the advanced countries, most crucial implementation problems such as those relating to domestic support for agriculture in the U.S. and E.U. and to the trade in textiles have been just accepted as issues that are in need of negotiation as part of a new enlarged round. That is, going against the grain of demands from the developing countries, including India, in the run-up to Doha, that implementation issues need to be sorted out before any new round of talks is initiated, almost all of those issues have been included in the agenda of the new round.

AFP
A bottle of wine at a bistro in Paris. This French vintage is exported to 150 countries. The Doha Declaration in the area of geographical indications provides implicit copyright to wine producers from France to the use of the word 'champagne'.

Third, after much hard bargaining the developing countries have managed to obtain a small concession in the area of agricultural support in the developed countries. The E.U. had, after much stonewalling, agreed to reduce, "with a view to phasing out", agricultural export subsidies. This is only a small advance, since no date has been set for the phase-out and since the real issue, which is the reduction in the use of "permitted" green- and blue-box subsidies by the developed countries to subsidise their farming community, has been left to be renegotiated in the course of the new round. This despite the evidence that many of those subsidies not only affect the volume of world production and trade, but in the final analysis world prices as well.

Fourth, in the area of geographical indications, which provides for example a kind of implicit copyright to wine producers from France for use of the word champagne, developing countries have managed to include a provision to discuss the extension of that privilege to commodities other than wine and spirits. If that discussion leads to such an extension, it could, for example, help India to file for protection regarding use of terms such as 'basmati'(rice) Kancheepuram (fabric) and so on, on geographical grounds.

Finally, India has won a symbolic victory inasmuch as the immediate agenda for the new round includes, besides implementation issues and the already mandated negotiations on agriculture and services, only industrial tariffs, anti-dumping duties and certain aspects of trade and the environment. Core labour standards have just been referred to and the work of the International Labour Organisation (ILO) in this area taken note of. And negotiations on the so-called Singapore issues, such as foreign investment, competition policies, public procurement and trade felicitation, though not altogether dropped, are to be taken up as part of the new round only after reconsidering the matter and generating an explicit consensus on negotiations on them at the time of the fifth Ministerial Meet to be held in 2003. While agreeing to postpone a final decision on these issues, the developed countries have also put in a mandate for completion of negotiations by 2005.

ALTOGETHER, this does look to be a long list of victories for a group of countries that lost out substantially at the end of the Uruguay Round, which largely proved to be an exchange of concessions among the developed. But most of these are mere statements of intent to discuss, and in areas such as agriculture and textiles where early concession were needed and expected, little has come out of Doha.

Doha also made clear the distance developing countries as a group have to travel if they are to make any real difference to the unequal international trading order. The most disconcerting was the innumerable ways in which the developed countries conspire to divide the developing countries and win major concessions for themselves. The scenario as it evolved was indeed quite instructive. To start with, the U.S. set itself up as a reasonable negotiator demanding some liberalisation of agricultural trade plus inclusion of issues such as industrial tariffs and anti-dumping duties in the agenda for a new round of trade negotiations. The E.U., on the other hand, remains intransigent on agricultural protection and subsidies, but puts on the table a range of new issues varying from the environment to investment and competition policies. This almost predetermines the compromise that is to come: the E.U. gives in a bit on agricultural trade, the developed camp as a whole agrees to discuss implementation, but they get in return a new round which at the minimum has the issues raised by the U.S. on the agenda and at the maximum includes all the issues raised by the E.U. The actual outcome included a new round that had on its agenda a combination of issues lying somewhere between the minimal demands of the U.S. and the maximal demands of the E.U.

THE surprise that Doha sprang was not in this outcome, but in three other areas. First, in the unusual unity within the developing country camp, even if for a short period of time, and the strong resistance by the Indian delegation in general and Commerce Minister Murasoli Maran in particular, that helped keep the implementation issues on the agenda as well as allowed developing countries to garner the limited gains listed earlier. Second, in the extent to which the developed countries went to split the developing-country camp and push through a version of their agenda. Despite claims of having learnt their lessons at Seattle and promises of abjuring non-transparent procedures, when the chips were down the WTO leadership and developed-country representatives returned to their earlier modes of functioning. Through pre-Doha meetings and "green-room" consultations with a select group of developing countries, through offers of aid to the African, Caribbean and Pacific (ACP) bloc, through pressure tactics such as locking in representatives without aides for hours together so as to badger them into agreement, through attempts at labelling delegates as isolationist and through what amounted to sheer verbal abuse and public admonition, the developed countries did manage finally to break the unity of the developing as well as come through with an agreement even if only after an unscheduled sixth day of negotiations.

Finally, Doha was a surprise because despite all this the developing countries went home with little to show for themselves other than promises of going part of the way to meet their concerns. Most important, in critical areas like the trade in textiles and domestic support to agriculture, the developed countries have given nothing at all.

Domestically, the issue of interest is the reason why unlike the last time this time around the Indian delegation and its leader chose to stick it out with a hardline position till the very end, even if it did not yield much by way of results. While personalities do matter here, it must be realised that Minister Maran had obtained Cabinet sanction for his tough negotiating stance before he left for Doha. One explanation for the stance cleared at the Cabinet could be that the NDA government has realised that its decision to opt for accelerated liberalisation was proving counterproductive given the unequal nature of the trading system put in place by the Uruguay Round. Redressing that inequality would then be seen as a prerequisite for bailing out the reform strategy. But if this was the motivation, one should expect that the failure to achieve much at Doha should make the government cautious about proceeding with its reform agenda. The reaction has in fact been just the opposite. Addressing a press conference immediately after his return from Doha, Maran emphasised the need to deepen economic reforms so that economic units within the country restructure themselves over the next two years to face up to the likely intensification of international competition. "If there is one lesson from Doha, it is (that) we should reform fast," he is reported to have said.

The second explanation could be that having faced substantial domestic criticism in the past, including from within segments of the ruling coalition, the NDA government decided to change tack in international negotiations and take a more nationalist stance. But whatever benefits are likely to accrue from such a public display of national sentiment outside the country would be more than neutralised by the obvious willingness of the government to offer major economic concessions to the developed countries in the domestic market in the wake of the Pokhran blasts of 1998.

The third likely explanation is that the government knew that international circumstances were such that it would finally be left with little support for its hardline stance. This, it may have surmised, would allow it to give in or compromise in the final analysis. That would mean that while the results from Doha would broadly be in keeping with what the developed-country camp wanted, India would be seen as having fought hard and not caved in, but as having, out of sheer lack of support and a need for reasonableness at an international forum, had to let the 'majority' view prevail.

The slight friction that this generated vis-a-vis the developed countries would be a small and temporary price to pay, in return for the benefit that strong resistance would yield in terms of winning international NGO praise and neutralising domestic criticism about its reform programme. The lack of correspondence between India's domestic and international positions on the role of markets and freer trade, as well as the fact that despite its opposition India withdrew without gaining much more than what had been won by the sixth day, suggest that this is in all probability the most plausible explanation for India's initial, unusually strong resistance.

24.11.2001

. Patents issues

From Frontline online  at flonnet.com

David

BY choosing to protect the interests of a pharmaceutical company in the face of the anthrax scare, the Bush administration is mired in a controversy. Caught between the anthrax scare and the need to keep to its hardline stance on protecting patents ahead of the World Trade Organisation (WTO) ministerial meeting in Doha, the Bush Administration chose to defend the patent rights of the multinational company, Bayer AG.

Ciprofloxacin, or rather Cipro, Bayer's brand of ciprofloxacin, is in the midst of a controversy. Until recently it was the only drug on the United States Food and Drug Administration's (FDA) approved list of drugs for the treatment of anthrax. At issue is whether monopoly profits guaranteed by Bayer's American patent, which expires in end-2003, is more important than Americans' access to the generic version of the antibiotic, available across the world at a fraction of the price.

Three issues are at the centre of the Cipro controversy. First, there are concerns about the high price of the Bayer drug, enforced by its monopoly status in the U.S. market. A Cipro pill costs $6 in the retail stores in the U.S. A 60-day twice-daily regimen of Cipro, the recommended dosage for people exposed to anthrax, would cost each potential anthrax patient about $720. The high prices mean Americans empathise easily with those suffering from Acquired Immune Deficiency Syndrome (AIDS) patients who run bills to the tune of several hundred dollars a week for anti-viral drugs.

The second issue, crucially linked to the first, is the increasing doubt about Bayer's capability to provide sufficient quantities of Cipro in the face of the unprecedented emergency. In the wake of the anthrax scare, there has been a run on pharmacies stocking Cipro. Drug stores have reported thousands of orders daily and there are rumours that some pharmacies and hospitals are even hoarding the drug. This is despite the fact that the FDA has recently approved penicillin and doxycycline to treat anthrax.

The third issue relates to the U.S. stance on patents and intellectual property rights, which protects the interests of the drug companies. The implication is that the administration would rather confine the Cipro issue to a question of prices and availability rather than as one which challenges the rights of corporations with a monopoly, to make profits at the expense of public health needs.

CIPRO has been a blockbuster for Bayer in the U.S. market. Last year, its sales netted a billion dollars. In the wake of the anthrax scare the company has planned to make the most of the premium that the drug enjoys in the U.S. market. Bayer announced that it has stepped up production and expects to ship 15 million tablets in the next three months. Industry sources told Frontline that although ciprofloxacin is more expensive to produce because it must be synthesised - not mass-produced by fermentation as is the case with some other antibiotics - Cipro commands a premium in the U.S. solely because it is on patent. Industry sources have pointed out that Bayer's dependence on Cipro for revenues is greater because the company was forced to recall a drug for treating diabetes, which resulted in several patient deaths.

The availability of generic ciprofloxacin in markets across the world - at a fraction of what Cipro costs - has raised a furore in the U.S. Critics are aghast that Bayer is not only being allowed to charge high prices but is being protected from the competing influence of numerous other generic manufacturers across the world (see table). Bayer's wholesale rate for Cipro in the U.S. is $4.67 for a 500 mg pill; the company's "best price", offered on a preferential basis to U.S. Federal agencies, is $1.83 a pill. Bayer sells the drug for $1.58 to the Canadian government. In contrast, a Canadian generic producer, Apotex, sells the drug for 95 cents. In India, generic ciprofloxacin is sold for as little as three cents a pill and even the best-selling brand costs about 15 cents a pill. Bayer sells the drug for as low as about $2 in the U.K. and at about $1.50 in New Zealand.

In contrast to the U.S. government's reaction, on October 16 the Canadian government entered into a contract with Apotex for one million ciprofloxacin pills for supply to its health services. This was expected to save the Canadian government at least one million (Canadian) dollars. Indeed, Canada announced on October 17 that it had overridden Bayer's patent, allowing generic manufacturers to circumvent Bayer's patent. However, days later, the Canadian government made a turnabout. It announced that it had rescinded its agreement with Apotex and that it was offering compensation to the company. Amar Lulla, joint managing director, Cipla, told Frontline that the Canadian Government had "caved in under pressure from the drug companies".

Commenting on the Cipro affair in a response to Frontline, Jeff Connell, Director, Public Affairs, at the Canadian Drug Manufacturers Association, said the Canadian government ordered the pills from Apotex without issuing a compulsory licence or contacting the Patents Commissioner. "Given its well-publicised problems producing enough Cipro to meet demand, it is clear that one million pills for Canada was not a priority." He said that "this changed once news of the Apotex order hit the Canadian and, more important, U.S. news media." Connell pointed out that Bayer realised that Canada's move to purchase generic ciprofloxacin "was a precedent that threatened its market exclusivity (and profits) in the real Cipro market, the United States."

AT least 78 Indian companies manufacture generic ciprofloxacin. But they cannot sell the drug in the U.S. until Bayer's patent expires in 2003. Cipla's version of ciprofloxacin was developed in 1989, two years after Bayer was granted its patent for Cipro. Companies such as Ranbaxy, Cipla and Dr.Reddy's Laboratories are already in the queue to sell the drug in the U.S. after Bayer's patent closes, having obtained provisional approval from the FDA. In fact, Ranbaxy's American subsidiary, Ranbaxy Pharmaceuticals, in Princeton, has offered to supply 20 million tablets of ciprofloxacin to the U.S. Department of Health and Human Services (HHS) within 45 days. Ranbaxy exports substantial quantities of ciprofloxacin to China and Russia, apart from selling its version in the Indian market.

THE Bush administration has sought congressional approval of a $1.5 billion budget for preparedness against the threat of bioterrorism. Of this, $643 million is to build a stockpile of drugs. Tommy G. Thompson, Secretary, HHS, has said that in the wake of the anthrax scare, the number of people who need to be protected could rise from the current two million to about 12 million. Even if the entire amount was spent on Bayer's Cipro at the heavily discounted rate of $1.83 a pill for the U.S. government, the funding would be enough for only about 350 million doses covering the requirements of less than three million people in the U.S. This implies that if Cipro is the only available means to combat anthrax, over nine million people would not be covered. In contrast, branded ciprofloxacin from India, costing about 15 cents, would enable coverage of nearly 32 million people.

On October 16, U.S. Senator Charles E. Schumer, who represents New York, asked the HHS to purchase in bulk generic versions of the drug. He said that this would not only reduce costs but will offer more protection to citizens from anthrax. He urged the HHS to use provisions of Federal legislation - in particular 28 U.S.C. 1498 - to break the Bayer stranglehold. The legislation enables the government to make official purchases from alternative sources for a payment to the patent holder of a royalty fee determined by the courts. Schumer said that the government "cannot rely on Bayer" to ensure "sufficient supplies of Cipro". Schumer argued that the government could not afford to "put our best response to anthrax in the hands of just one manufacturer." He also called on the FDA to grant final approval to the five generic drug manufacturers who already hold tentative approvals to manufacture ciprofloxacin. However, Thompson said that 28 U.S.C. 1498 cannot be invoked. Thompson claimed that he did not have the authority to override the Bayer patent.

In the face of mounting public criticism, the HHS entered into a deal with Bayer on October 25 which pegged Cipro at 95 cents a pill. Although Thompson attributed this substantial price reduction to hard bargaining, critics took a different view. James Love, Director, Consumer Project on Technology (CPT), an organisation which has researched on intellectual property issues from a consumer and public-interest perspective, claims that the Bush administration is simply unwilling to use the power that the law has given it to handle a major public health issue. Love was an active participant in an international campaign for alternative cheaper generic anti-AIDS drugs. Cipla's efforts to sell such drugs in Africa were staunchly resisted by the drug majors (Frontline, March 16, 2001).

Love argues that 28 U.S.C. 1498 has been used on several occasions for products ranging from drug to electronics technologies. Although the World Trade Organisation's Trade Related Aspects of Intellectual Property Rights (TRIPS) agreement does allow countries to produce or procure generic versions of drugs in the face of a national emergency - through the compulsory licensing mechanism - the U.S. and the multinational drug companies have been steadfast in their opposition to generic drugs.

On October 18, Love and Ralph Nader, in a joint letter to Thompson, pointed out that Thompson did indeed have the power to issue compulsory licences for the Bayer patent.

Nader and Love pointed out that "Bayer stands to make hundreds of millions if not billions of dollars in the wake of the September 11 terrorist attack on Americans." They said that in the absence of adequate government stockpiles those who could not afford the drug were in danger of being exposed to risk. The situation, they claimed, resulted in an "unethical and unnecessary form of rationing." They asked Thompson to protect public health instead of defending the "profiteering" drug companies.

On October 24, the Prescription Access Litigation (PAL) project filed a lawsuit against Bayer, alleging that the company had entered into collusive agreements with three generic ciprofloxacin manufacturers. It claimed that Bayer paid $200 million to three companies, among them, Barr Laboratories, to block consumer access to adequate supplies of cheaper versions of ciprofloxacin. The lawsuit, representing 11 consumer groups in 11 States, claims that the three companies agreed to abandon research on cheaper generic alternatives in exchange for the money they obtained from Bayer.

An earlier case filed in the Eastern District of New York last year resulted in a ruling that the consumer groups had established "plausible" anti-trust charges against Bayer. In that particular case the Judge observed that Barr Laboratories had applied in 1991 to the FDA to market ciprofloxacin. Barr Laboratories asserted that Bayer's patent on Cipro was invalid and unenforceable. Bayer then sued Barr for patent infringement. Although Barr obtained provisional FDA approval to manufacture and market ciprofloxacin, Bayer entered into an agreement with the company in 1997, and paid the company for not producing the drug. Bayer has till date made payments of more than $200 million.

THE Cipro controversy could not have erupted at a worse time for the Bush administration. It gave ammunition to those working against efforts to introduce a strong regime of international patent laws in Doha during the fourth ministerial. The issue has provided a rare opportunity for critics of drug multinationals to come together on a platform, citing not only public health issues but also issues relating to consumer rights.

The issue of intellectual property rights has always been controversial. The advocates of strong patent legislations have had to contend with criticism that the interests of private monopolies have to be balanced with the needs of public health, particularly in the developing world. The perception that the U.S. has been cutting corners while addressing domestic public health issues in order to protect its negotiating position in Doha is likely to enhance the prospects of resistance to TRIPS within the U.S. 

24.11.2001

. The Doha Debacle

From Fonrtline online at flonnet.com
Regards
David

THE self-appointed drum-beaters and trumpeters of the New Round were right: they knew better than even the leader of the Indian delegation what would be the denouement of the week-long negotiations at the Ministerial Meeting of the World Trade Organisation (WTO) in Doha, Qatar. They had tendered unambiguous advice to the government of India to join the bandwagon of the United States and the European Union well in time and welcome the launch of the New Round. Notwithstanding their expertise, their advice was based not so much on the rigorous examination of the issues involved as on the unflinching faith in the TINA (there is no alternative) doctrine. The wise Ministers accept such expert advice with alacrity. Alas, Murasoli Maran, the Union Commerce Minister, was too professional in his analysis of the issues confronting him and a bit too honest in his remarks. He could have learnt a thing or two about the virtues of expediency at the feet of our TINA brand experts. But that was not to be. And in the end, he had to swallow more than a mouthful of pride and a whole lot of strong statements he had made opposing negotiations on new issues.

NAYEF HASHLAMOUN/ REUTERS
Delegates attending the Doha Ministerial Meeting.

The question, however, is not how sincerely and doggedly Murasoli Maran fought before he finally caved in. It is even less about his personal embarrassment at the volte-face he had to do. To begin with, it is necessary to expose and lay threadbare the pitiable attempts to rationalise the failure at Doha and invent microscopic "gains". More important is the task of setting out the far-reaching implications of the Doha Ministerial Declaration. It is equally important to reflect on why it happened the way it happened.

First, the argument that the Indian delegation "succeeded" in postponing the launch of the New Round, or at the minimum, the negotiations on new issues, by two years. It is only a "Work Programme" that the Declaration speaks of, not the "New Round", it is argued. The argument is as naive as it is false.

The change of nomenclature does not alter the pith and substance of the process. The past "rounds" have followed a pattern: the Ministerial Declaration lays down a broad negotiating mandate for every subject on the agenda, a time-frame is indicated, a Trade Negotiations Committee is set up to supervise and direct the negotiations. The concept of treating the negotiations as a "single undertaking" was invented in the Uruguay Round. All these elements are unmistakably present in the Doha Ministerial Declaration.

NO negotiations of the type envisaged have ever been completed at one go in one ministerial meeting; nor even in two years. The Tokyo Round, which had some rule-making agenda, modest though in comparison with the agenda of new issues adopted in Doha, lasted six years. The Uruguay Round, which had a comparable agenda, lasted eight years. It has always been the practice that the broad negotiating mandate in the ministerial declaration would be followed by a process of elaboration of the mandate into specific elements of the multilateral discipline. The process took anywhere between three to five years. It is this process that has been launched in Doha and the talk of "postponement" of the negotiations on the new issues to the next ministerial meeting is stupid. One has only to look at the language and content of the so-called work programme under specific subjects, to see through this argument. For example, on all the three important new issues, namely, investment, competition policy and government procurement, the mandate starts with the acknowledgment: "Recognising the case for a multilateral framework." This amounts to a clear decision in favour of elaboration of a multilateral discipline.

Right up to the last hour of the ministerial meeting, the Indian delegation, among others, had questioned the very need for a multilateral discipline on these subjects. If postponement of negotiations had to have any meaning under the circumstances, the very question whether there should be a multilateral discipline should have been kept open until a later date. This matter, however, has been effectively and finally closed in favour of initiating substantive negotiations on the multilateral agreements. While the formal decision on modalities of negotiations, that is, on exchange of concessions under the agreement, has been left to the next ministerial meeting, no doubt whatsoever has been left in the text elaborating "further work" under the work programme that substantive negotiations on the content of the new disciplines would begin forthwith. Thus, the working group on investment will focus on "scope and definition; transparency; non-discrimination, modalities of pre-establishment commitments; development provisions, exceptions and balance of payments safeguards; consultation and settlement of disputes between members." The working group on competition policy will focus on "core principles including transparency; non-discrimination and procedural fairness; provisions for hardcore cartels; ... progressive reinforcement of competitive institutions in developing countries." One look at the lists of issues to be focussed on shows that they are but a contents page listing chapter headings of the text of a new multilateral agreement. Once these elements are elaborated in the next two years, as the Work Programme lays down, all that will be left for the next ministerial meeting would be to adopt formally the texts of the new multilateral agreements containing the elements elaborated earlier.

It has been argued that vehement opposition by the Indian delegation secured a last-minute "out" in that the Declaration was adopted on the basis of "an understanding" from the Conference Chair in regard to negotiations on new issues. The "understanding" says that "a reference to the explicit consensus being needed for the decision to be taken" at the next ministerial conference "would give each member the right to take a position on modalities that would prevent negotiations from proceeding after the fifth (that is, the next) session of the ministerial conference until that member is prepared to join in an explicit consensus." (The clarification within the brackets added.) As noted earlier, the decision on negotiations on modalities has been slated for the next ministerial meeting. Let us leave aside, for a while, the semantic and substantive confusion caused by the inclusion of some important modalities of negotiations in the Work Programme itself, which has to start forthwith. Let us also ignore, for a moment, the basic point that negotiations on modalities of exchange of concessions cannot be divorced from the substantive negotiations on the content of the disciplines. Let us also not question, for the sake of argument, the legal value of the Conference Chair's understanding. Even so, it is difficult to visualise what has been "gained" through such an " understanding". If members opposing the inclusion of new issues failed miserably in preventing the launch of the substantive negotiations on those issues at Doha in the first instance, on what basis can one hope that they would succeed in doing so two years later, when the substantive negotiations would have gained momentum and each member would be busy protecting its own specific interests in the light of the various elements of the discipline that would have been elaborated by then? If one were bent on blocking the consensus and forcing a vote, it could have been done at the Doha conference itself. Such a move would have sent shock waves around the developed world and energised the Third World countries, restoring one's credibility. Such a step can be taken at a later stage also, when a formal decision comes up for adoption. The Conference Chair's "understanding" is not needed to buttress the legal right inherent in the decision-making procedure. In sum, the "out" that has been obtained has little practical or legal significance. The fig-leaf does not cover the reality that India succumbed to the combined pressure of the U.S and the E.U.

LET us now turn to the second issue: the implications of the Doha Declaration. The implications are far-reaching with regard not only to the new issues but also to the old, continuing issues.

The investment issue has been on the agenda in the form of studying the implications since the Singapore Ministerial Meeting in 1997. That study exercise is by no means over. Nor are a large number of developing countries convinced about the need for a multilateral discipline on this subject. Their main argument is that it is not a trade issue and is best left for national governments to handle according to their own perspectives and objectives and requirements. The industrialised countries and their multinationals in financial and other sectors had tried hard to get the issue included under the services negotiations in the Uruguay Round. There was a specific proposal on the table then that the capital's "right to establish" should be recognised, meaning thereby that the investor should have the freedom to move across national borders without let or hindrance caused by nation-states. The move was countered by tabling the labour's "right to reside", meaning thereby that labour should have the right to migrate and reside wherever it may decide to improve its prospect. Hastily, the proposal for "right to establish" was withdrawn. Also, the services negotiations resulted in an agreement, which left a good deal of discretion in the hands of the member-countries. In the opinion of many analysts of the developed capitalist world, GATS (General Agreement on Trade in Services) remained a "weak" agreement. This perceived weakness is being sought to be removed by means of a comprehensive multilateral discipline on investment. What has happened in Doha is the beginning of the final assault of global capital on the economic sovereignty of the nation-states, particularly of the Third World. That would also ultimately spell the end of auto-centric development for the developing countries. The insistence on the inclusion of this item on the agenda has to be understood in this perspective and context and not in the limited context of the bald chapter headings that have been incorporated in the Work Programme.

DAVID GRAY/ REUTERS
A rally in Sydney on November 13 in protest against the economic impact of corporate globalisation brought about by the WTO.

THE move for a global discipline for competition policy has also been opposed by many developing countries. For one thing, their national policies and structures to implement such policies are not yet in place in many countries. The need, if any, is for a global discipline on regulating and eliminating the restrictive business practices of multinationals. But all initiatives in that regard have been squarely thwarted and effectively neutralised by developed countries in forums such as the United Nations Conference on Trade and Development (UNCTAD) and the United Nations Economic and Social Council (ESOSOC). Under a multilateral discipline on competition policy, the powers of nation-states in the Third World would get circumscribed in the name of principles and rules of non-discrimination, procedural fairness and transparency.

Government procurement was always outside the purview of any multilateral discipline. Under the General Agreement on Tariffs and Trade (GATT), a code on government procurement was established but it remained a plurilateral arrangement, that is to say, it was optional for member-countries to join it. Government procurement is sizable in Third World countries. It serves economic and social objectives. Through this means incentives can be offered to indigenous industry, public distribution of essential commodities can be ensured, and even prices can be influenced to meet the social goals. Global capital is making the first move to neutralise ultimately this powerful weapon in the hands of governments. Although the proposal limits itself to transparency, it is clear that transparency cannot be a goal in itself as far as the interest of global capital is concerned. The move would be followed by demands for "liberalisation" in due course.

In the negotiations on the "new issues", more often than not it is the developing countries that would be "paying" in the sense of accepting new obligations and paring down their autonomy in economic decision-making. It would only enhance the imbalance that characterises the outcome of the Uruguay Round of agreements and the functioning of the WTO. Hence developing countries legitimately asked for the existing imbalances to be removed before entering into negotiations on new issues. This was the celebrated "implementation issue". Here too, the record of Doha is niggardly. Improved access for textile exports under the agreement on textiles, preventing the abuse of anti-dumping provisions by industrialised countries, particularly the U.S., and the loopholes left in the agreement on agriculture regarding subsidies given by developed countries were some of the issues flagged. There was no substantial progress on this and the issues have now been incorporated as part of the new negotiations, thus ensuring that the existing imbalance worsens.

Two issues need special reference here. The agreement on Trade-Related aspects of Intellectual Property Rights (TRIPS) and the system for settlement of disputes in the WTO. The working of the two has presented several difficulties for developing countries. TRIPS was found to be responsible for the non-availability of life-saving drugs at affordable prices. It also has been perceived as a constraint on the dissemination of technology for development. The dispute settlement system was perceived as being biased, undemocratic and unaccountable even to the WTO's highest legislative body. The situation called for a thoroughgoing review of the two agreements. This has not received attention in the Doha Declaration. The hoopla about the declaration on "TRIPS and Public Health" is misleading. The Declaration, in its cautious and emaciated form, does not add to or subtract from TRIPS. It is at best a public relations exercise. It does not add to the armoury of the poor countries in need of some effective mechanism to ensure the supply of essential drugs at affordable prices.

In the area of agriculture and services, the outcome of Doha is no better. In agriculture, the perspective of negotiations will continue to be informed mainly by trade concerns of temperate-zone, capital-intensive, heavily subsidising, trade-oriented, agriculture-exporting countries. There is no recognition that for a country like India, that perspective is inappropriate and harmful. There is no hint that India would insist on retaining its right to impose quantitative restrictions (QRs) on imports of agricultural products as necessary, without qualifications and without prior consultations in the WTO. All that is there in the Doha text of some interest is that differential treatment for developing countries shall be so elaborated as to be operationally effective and "to enable developing countries effectively to take account of their development needs, including food security and rural development." This by itself is totally inadequate to meet the crisis that Indian agriculture is facing.

The E.U., more particularly France, got away with diluting the provisions regarding the "phasing out" of all forms of export subsidies, further reducing the prospect of any substantial reduction in such subsidies in the course of the negotiations.

In services, there is a re-affirmation of the member's right to "regulate and introduce new regulations on the supply of services and of the articles in GATS that were designed to meet the concerns of developing countries. But there is no departure from the very narrow approach regarding the movement of labour. Moreover, no cognisance has been taken of the far-reaching issue raised by the U.N. Sub-Commission on Human Rights, about the fundamental importance of the delivery of basic services, particularly health and education, as a means of promoting human rights, and the likely adverse implications of a market-oriented and "liberalising" approach in respect of such services on the promotion of human rights.

All in all, the Doha Declaration is a clear gain for the developed capitalist world. It has catered to the needs of global capital in crisis. And this has been done in conformity with the way capitalism has reacted to its crisis all along in its history, except perhaps in its short, so-called "golden age". That is to say, by further building upon the world order in which global capital can expand its field of operation, avail itself of new opportunities for appropriation and intensify the rate of exploitation.

IT is time to turn to the third question about Doha: Why did it happen the way it happened? One of the main contradictions of the times is the WTO. It has a facade of democratic structure and rules of functioning. It is at the same time a non-transparent, non-participative, and undemocratic institution. Its very birth was occasioned by the processes and motivations characterised by those attributes. It talks of one vote for one member and decisions by prescribed majorities. It never flinches from forcing the will of the two powerful capitalist entities on the unwilling and screaming majority of Third World countries. It swears by consensus, but it reaches the consensus by suppressing or ignoring dissenting voices. It markets its predatory designs in the name of liberalisation and freer exchanges. The fundamental reason why things happened the way they happened in Doha is our failure to recognise the contradiction and seize the opportunity that the contradiction itself provides to turn it upside down.

The point is that India has to recognise that it is firmly situated in the South, which accounts for the majority in the WTO. India has to disabuse itself of the fashionable illusion that it is about to emerge as a great power and soon would be hobnobbing with the two capitalist giants. Neither logic nor the history of capitalism supports such a conclusion. More particularly, India has to regain credibility with the countries of the South in the WTO. It cannot do it by indulging in the luxury of issue-based, opportunist coalitions. It has also to realise that, more than any other country in the South, by virtue of its size, stage of development and its resources, it has better potential to bear the cost of leading the challenge to the inequitable order represented by the WTO.

Unfortunately, India's policies and reactions in the last few years have been at variance with that kind of approach. It has been, and so seen by the whole world to be, eager to gain the favours of the big powers. India has taken unilateral measures to offer its markets, be it in telecommunications or in thermal power generation, to impress the big powers or convey the good tidings to the rulers of the country to be visited by Indian leaders. India's eagerness to help the U.S. in its war against Afghanistan has not gone unnoticed by a large majority of developing countries. New Delhi's somersault on the question of the U.S.' national missile defence (NMD) surprised many. In that background, the Third World countries are not easily convinced of India's determination to withstand big-power pressures and fight out the battle in the WTO to the bitter end. The prophecy of isolation thus becomes self-fulfilling.

In short, the Doha debacle cannot be torn out of its wider context. Nor can one expect to see an alternative outcome without changing the context. Murasoli Maran held on to his guns and did his best in trying the brinkmanship. One week's performance, howsoever impressive it may be, cannot alter the trajectory of events determined by a whole lot of factors. The performance has to be informed by a vision of the new world order based on equity. It has to be backed by a strategy of building solidarity of the South. It has to be credible to the South in terms of the totality of external and domestic policies. Once the strategy in the WTO is founded on the solidarity of the South, the formal democratic representation that is mandated in the constitution of the WTO can be converted into a powerful strategic weapon to challenge and moderate, if not to halt and reverse, the onslaught of the process symbolised by the Doha meeting. Without that, Murasoli Maran could only do so much and not more.

S.P. Shukla was formerly India's Ambassador to GATT and Secretary in the Commerce and Finance Ministries of the Union Government.


24.11.2001.

. New ICTSD newsletter on trade and biological
resources launched

-----------------------------------------------------------------------
BRIDGES Trade BioRes, Vol. 1, No. 1    22 November, 2001
------------------------------------------------------------------------
                            Table of Contents

    - New ICTSD Publication On Trade And Biological Resources
 I. WTO
    - Environment Makes Its Way Onto The WTO Negotiating Agenda
    - TRIPs Council To Examine GI Extension, TRIPs-CBD Relationship,
           Protection Of TK
 II. PLANT GENETIC RESOURCES
    - FAO International Undertaking Finally Adopted
    - Mexico Biodiversity Project Cancelled Following NGO Criticism
 III. BIOTECHNOLOGY
    - EU Resists Biotech Discussion In SPS Committee
 IV. IN BRIEF
    - CBD Advisory Body Discusses Forest Trade
    - US Keeps Up Pressure On Japan To Halt Whaling
 V. EVENTS & RESOURCES
    - Events
    - Resources

NEW ICTSD PUBLICATION ON TRADE AND BIOLOGICAL RESOURCES

The International Centre for Trade and Sustainable Development (ICTSD)
is proud to present a new product to the trade and sustainable
development communities: BRIDGES Trade BioRes - Trade and Biological
Resources News Digest. This new publication is produced in
collaboration with IUCN - The World Conservation Union, and its
Commission on Environment, Economic and Social policy (CEESP), in an
effort to complement the activities of both organisations on the
increasingly important intersection of trade and biological resources.

Please note that we will not be sending you any more issues of BRIDGES
Trade BioRes unless you wish us to do so. In order to receive this
publication on a regular basis, please send a blank email to
subscribe_biores@ictsd.ch. The issues will also be posted on the ICTSD
website at http://www.ictsd.org/.

Recipients of the first issue were carefully selected in an effort to
target key stakeholders in the trade and sustainable development
communities. If you know of others who might be interested in receiving
BRIDGES Trade BioRes, we would kindly ask you to forward this issue to
them.

BRIDGES Trade BioRes aims to build bridges between diverse and often
insulated communities (including policy-makers and those in civil
society) working on issues related to biological resources, trade and
sustainable development. To this end, the publication will continue in
the tradition of BRIDGES Weekly Trade News Digest, providing objective
coverage, context setting, reporting and analysis on these intersecting
issues. Articles will cover a diverse field of activities as they
relate to trade policy and development of international governance
mechanisms in areas such as biodiversity, traditional knowledge,
intellectual property rights, biotechnology, genetically modified
organisms, and food security.

The format of BRIDGES Trade BioRes will be closely modelled on the
established format of BRIDGES Weekly. The main articles (4-6 per issue)
will be grouped under categories that will precede each story title.
These "tags" are intended to help the readers to quickly grasp each
story's area of focus. An "Additional Resources" section at the bottom
of most articles will provide links to further information sources on
the topic. Articles will be complemented by "In Brief's" which provide
a concise coverage of recent developments. The final section, "Events &
Resources", will inform readers of upcoming events and recent
publications in the relevant areas.

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WTO
------------------------------------------------------------------------

ENVIRONMENT MAKES ITS WAY ONTO THE WTO NEGOTIATING AGENDA

WTO Members for the first time in the trade body's history agreed to
negotiations on environmental issues, thereby at least partly meeting
one of the key demands pushed by the EC at the Fourth WTO Ministerial
Conference, held in Doha, Qatar, on 9-14 November. The negotiations
will be part of a single undertaking which includes negotiations on a
range of other issue areas (see BRIDGES Weekly, 15 November 2001;
http://www.ictsd.org/weekly/01-11-15/story1.htm). The EC and the United
Nations Environment Programme (UNEP) welcomed this move, while
developing countries and environmental organisations showed mixed
reactions to the environment-related outcomes of the Conference.

As set out in the Ministerial Declaration, negotiations on all but the
Singapore issues (ie investment, competition, transparency in
government procurement and trade facilitation) will begin immediately.
The Trade Negotiating Committee -- instructed to meet for the first
time not later than 31 January 2002 -- will supervise the overall
conduct of the negotiations under the authority of the General Council.
The negotiations are set to conclude by 1 January 2005. The outcomes of
the different negotiating areas (with the exception of the Dispute
Settlement Review) will enter into force as part of a single
undertaking.

Stronger language in the preamble

Using stronger language than ever before in WTO agreements, WTO Members
in para. 6 of the Ministerial Declaration's preamble stress that the
multilateral trading system and efforts towards environmental
protection and sustainable development "can and must" be mutually
supportive. In addition, the preamble recognises Members' right "to
implement measure to protect human, animal or plant life or health".
The text also for the first time explicitly recognises the importance
of promoting cooperation between the WTO and relevant international
environmental and developmental organisations, singling out the WTO's
continued cooperation with UNEP in particular.

Negotiations launched on environment

The Ministerial Declaration launches negotiations on trade and
environment in three areas (para. 31): (i) relationship between WTO
rules and trade obligations set out in Multilateral Environmental
Agreements (MEAs); (ii) procedures for information exchange between MEA
secretariats and relevant WTO committees, including criteria for
granting observer status; and (iii) the reduction or elimination of
tariff and non-tariff barriers to environmental goods and services.

The first area was further qualified by adding that the
negotiations "shall not prejudice the WTO rights of any Member that is
not a party to the MEA in question", thereby avoiding the 'party versus
non-party' issue, according to one UNEP official. Environmental groups
are concerned that this qualification could in fact prove to be a
disincentive for getting countries to sign on to MEAs. "These are
loopholes for the US so it can duck the MEA issue," said Remi
Parmentier of Greenpeace.

In addition, the Declaration further waters down the mandate under (i)
and (ii) by saying that the negotiations "shall not add to or diminish
the rights and obligations of Members under existing WTO agreements".
According to sources, this shifts the possible outcomes of negotiations
on these points away from rule changes and towards clarifications or
footnotes to existing rules.

Members also agreed to conduct negotiations on clarifying and improving
WTO disciplines on fisheries subsidies as part of negotiations on 'WTO
Rules', "taking into account the importance of this sector to
developing countries" (para. 28). This decision marks a significant
change from the previous WTO mandate on this issue, which had
restricted discussions in this area to the non-negotiating body of the
Committee on Trade and Environment (CTE). The World Wildlife Fund
(WWF), one of the key campaigners on fisheries subsidies, welcomed the
launch of the negotiations, praising in particular the leadership of
Iceland and the US at Doha. "For the first time, governments have
recognised the responsibility of the WTO to do its part in promoting
the health of a vital natural resource," said David Schorr, Director of
WWF's Sustainable Commerce Program.

CTE mandate more focused

The CTE is instructed to continue its work programme while focusing in
particular on the effect of environmental measures on market access,
relevant provisions of the Agreement on Trade-Related Aspects of
Intellectual Property Rights (TRIPs) and eco-labelling (para. 32). The
first two issues are of particular concern to developing countries and
might have been singled out in order to obtain their support for
negotiations on environment, as one trade source speculated. Similar to
points (i) and (ii), however, discussions in the CTE should not impact
on Members' rights and obligations under WTO agreements.

Para. 51 of the Declaration furthermore identifies the CTE together
with the Committee for Trade and Development (CTD) as fora "to identify
and debate developmental and environmental aspects of the negotiations,
in order to help achieve the objective of having sustainable
development appropriately reflected". As one environmental source
pointed out, this provision could help to elevate and focus the mandate
of the CTE, where environmental discussions have remained at the purely
analytical level since the WTO's creation in 1995.

Developing country concerns on environment

The Declaration recognises the technical assistance (TA) and capacity
building needs of developing countries in the area of trade and
environment, and calls for a report on these activities to be prepared
for the Fifth Session (para. 33). Activities will be carried out
through the WTO Secretariat's technical cooperation programmes and
other external mechanisms, including bilateral donors, regional banks
and international organisations, such as UNCTAD. The budget for the WTO
TA efforts overall will be "no lower than that of the current year"
(ca. USD 10 million for 2000).

Environment also finds mention in the Decision on Implementation-
Related Issues and Concerns, which takes note of a proposal stating
that measures implemented by developing countries with a view to
achieving legitimate development goals, such as "development and
implementation of environmentally sound methods of production", should
be treated as non-actionable subsidies. This proposal will be discussed
in the Committee on Subsidies and Countervailing Measures, which will
report on the outcomes by the end of 2002.

Mixed Reactions

The EC in their assessment of the results at Doha expressed
satisfaction with the way in which the Ministerial Declaration
reflected its calls for increased action on sustainable development and
environmental protection, which they say will be "mainstreamed
throughout the negotiations". While the EC claims that the Declaration
also covers precaution and labelling, EC Trade Commissioner Pascal Lamy
has assured US Trade Representative Robert Zoellick that the EC will
not use the controversial "precautionary principle" to justify
illegitimate trade barrier.

The positive sentiments were echoed by Klaus Toepfer, Executive
Director of UNEP. "Negotiations on trade and the environment were,
until recently, a taboo subject in the WTO," he pointed out. "We still
have a long way to go. But the agreements in Doha are, I believe, a new
beginning". While welcoming the launch of negotiations on environment
as "encouraging", one UNEP official cautioned that the outcomes for the
environment will now depend on various other factors, including how
Members use their mandate, the yet to be determined body that will
carry out the negotiations, processes and coordination at the national
level, participation of civil society and other international
organisations, and further clarification of the negotiating mandate.

Developing countries -- who have so far strongly resisted negotiations
on environment at the WTO fearing that resulting provisions might be
used for protectionist purposes -- remain weary of the references to
environment in the Ministerial texts and the resulting 'qualitative
jump' from a work programme in the CTE to negotiations. While agreeing
that the relationship between MEAs and WTO rules should be clarified, a
developing country representative questioned why the WTO should be
singled out as the forum for negotiations rather than the MEA
Secretariats. One developing country delegate also pointed out that the
environmental provisions in the end were "much less rigorous" than
expected, but highlighted continued concern among developing country
that negotiations might expand to other issues, such as precaution.

While environmental groups cautiously welcomed the launch of
negotiations on environment, they also highlighted potential negative
environmental impacts of the outcomes at Doha. WWF expressed concern
about the launch of negotiations on investment, which they referred as
a "significant setback for the environment" given the important role of
investment flows on the world's environment. Greenpeace, one of the
strongest critics of Conference's environmental outcomes, claims
that "the agreement on environment offers very little progress in
defending environmental protections against trade concern". "This
meeting has failed to produce a vision for sustainable development and
the protection of the environment," said Parmentier.

Additional Resources

The Ministerial texts (Declaration, Decision on Implementation and
Declaration on TRIPs and Public Health) are available on the ICTSD
website at http://www.ictsd.org/ministerial/doha/relevantdoc.htm. For
daily coverage of the Ministerial Conference, see
http://www.ictsd.org/ministerial/doha/wto_daily/index.htm.

"EU assures U.S. it will not pursue 'precautionary principle' in new
talks," WTO REPORTER, 21 November 2001; "environmental issues make
significant progress at key trade talks," UNEP, 15 November 2001; "WTO
Meeting Fails the World," GREENPEACE, 14 November 2001; "CAFOD analysis
of WTO Doha Declarations," CAFOD, 19 November 2001; "Environment scores
two wins, one loss in Doha," WWF, 14 November 2001; ICTSD Internal
Files.

TRIPS COUNCIL TO EXAMINE GI EXTENSION, TRIPS-CBD RELATIONSHIP, PROTECTION OF
TK

In spite of the increasing number of developing country proposals on a
range of issues concerning the Agreement on Trade-Related Aspects of
Intellectual Property Rights (TRIPs), negotiations in Doha focused
mainly on just one: public health (see BRIDGES Daily Update No. 4, 13
November 2001;
http://www.ictsd.org/ministerial/doha/wto_daily/englishissue4.htm).
However, the Ministerial Declaration and the Decision on Implementation-
Related Issues and Concerns each contain a section on TRIPs. These
cover three areas: geographical indications, Article 27.3(b) and
technology transfer to least-developed countries. In addition, the
Ministerial Declaration contains some language on TRIPs in the context
of trade and environment (see related story, this issue). While these
provisions do not establish any new commitments in the sense of norm-
creating, the decision to cover these controversial issues may
ultimately result in a negotiations that go beyond the mere
clarification of existing rules, a trade source said.

Little headway on geographical indications

Issues relating to the extension of the protection of geographical
indications (GIs) to products other than wines and spirits, as provided
for in Article 23 of the TRIPs Agreement, will be addressed in the
Council for TRIPs. Discussions on this issue, however, have been going
on in the Council for some time, and the Ministerial Declaration simply
acknowledges that these are on-going without committing members to a
resolution.

The inclusion of this issue is a response to demands made by some
Members that additional protection should not be limited to wines and
spirits, but should include products that are economically important
for themselves. Countries that have been seeking such additional
protection are mainly from Asia, Europe and Africa. They also include
countries like Thailand and India that have complained about what they
see as the misappropriation of high-value goods, namely jasmine and
basmatic rices. For these countries, the issue is of particular
important as that GIs can be used to promote the export of valuable
products and prevent misappropriation. They furthermore consider it a
matter of fairness that such additional protection not be limited to
alcoholic beverages. Those who have tended to oppose additional
protection are mainly from the Americas plus Australia and New Zealand,
all of which are bulk exporters of agricultural products.

In addition, WTO members have agreed to negotiate to establish "a
multilateral system of geographical indications for wines and spirits
by the Fifth Session of the Ministerial Conference". This essentially
repeats the commitment contained in Article 23.4 of the TRIPs
Agreement, except that it establishes a deadline. This provision is of
great interest to those European countries, such as France, that use
GIs to market wines and spirits. Conversely, several countries in the
Americas and the southern hemisphere have successfully traded such
products without resort to GI protection, and have little to gain from
the establishment of the multilateral system.

Article 27.3(b) discussions set to continue

In spite of being one of the most controversial articles of the TRIPs
Agreement, discussions on Article 27.3(b) (patentability of life forms)
were understandably overshadowed by the negotiations relating to TRIPs
and public health. In the end, the TRIPs Council is merely
instructed "to examine, inter alia, the relationship between TRIPs and
the Convention on Biological Diversity, the protection of traditional
knowledge and folklore, and other relevant new developments raised by
members pursuant to Article 71.1". [Article 71.1 deals with reviews of
the implementation of the Agreement, including with a possible view to
modifying or amending it.] While reference to traditional knowledge and
folklore was novel for a Ministerial Declaration, indicating how
mainstream these topics now are, no explicit commitments were made by
WTO members.

To date, discussions at the TRIPs Council on these issues have failed
to make substantial progress, leading trade sources to speculate that
the contentious issues will only ever be resolved within the context of
a new trade round that explicitly re-opens negotiations on the text.

Technology transfer to least-developed countries

The Decision on Implementation-Related Issues and Concerns reaffirms
the "mandatory" nature of the provisions of Article 66.2 of the TRIPs
Agreement, which requires developed country members to provide
incentives for the promotion and encouragement of technology transfer
to least-developed countries. The TRIPs Council is mandated to oversee
developed country compliance. To this end, the latter countries must
before the end of 2002 submit reports on the practical functioning of
these incentive measures that will be reviewed in the TRIPs Council.

The Ministerial Declaration also establishes a Working Group under the
auspices of the General Council to examine "the relationship between
trade and transfer of technology" and "possible recommendations on
steps that might be taken within the mandate of the WTO to increase
flows of technology to developing countries". The General Council is to
report on the progress of this examination to the Fifth Session of the
Ministerial Conference.

Some reactions

Reactions to the text on 27.3(b) and GIs varied within the NGO
community. Some considered the provisions on TRIPs -- and the outcome
of the Ministerial Conference more generally -- to represent a defeat
for developing countries. Others, however, saw it as a draw, setting a
victory on public health against the failure of the Conference to
commit to a substantive review of Article 27.3(b) and thereby respond
to the concerns of a certain number of developing countries about
biopiracy and the patenting of life-forms. However, because of the
focus on public health, reaction so far to these other TRIPs-related
issues has been perfunctory.

ICTSD Internal Files.

------------------------------------------------------------------------
Plant Genetic Resources
------------------------------------------------------------------------

FAO INTERNATIONAL UNDERTAKING FINALLY ADOPTED

After seven years of difficult negotiations, the revised International
Undertaking (IU) -- now International Treaty (IT) -- on Plant Genetic
Resources for Food and Agriculture (PGRFA) was finally adopted by the
Conference of the UN Food and Agriculture Organization (FAO) on 3
November, making it the first binding international instrument dealing
specifically with the conservation and sustainable use of PGRFA. It
remains to be seen, however, how the IT's provisions will influence
discussions at the WTO and which countries will actually ratify the
Treaty.

Negotiations on the revision of the IU to harmonise it with the UN
Convention on Biodiversity (CBD) have been underway since 1994. In its
original form as a non-binding agreement, dating from 1983, the IU was
based on the principle that PGRFA should be "preserved [...] and freely
available for use, for the benefit of present and future generations"
as part of the common "heritage of mankind." To date, 113 countries
have adhered to the IU, the most notable exceptions being Brazil,
Canada, China, Japan, Malaysia and the US.

Recognising both the sovereign rights and the inter-dependence of
countries over their PGRFA, the IT establishes a Multilateral Sytem
that aims to facilitate access and benefit-sharing (ABS). ABS is to be
regulated principally by means of a standard material transfer
agreement (MTA), which will apply also to transfers to third parties
and to all subsequent transfers.

Agreement on IPRs despite US and Japan opposition

An Open-Ended Working Group met from 30 October to 1 November in Rome,
Italy, alongside the FAO Council to finalise the issues that had
remained unresolved at June's Sixth Extraordinary Session of the
Commission on PGRFA (see BRIDGES Weekly, 3 July 2001;
http://www.ictsd.org/html/weekly/03-07-01/story3.htm). One of the most
contentious points on the agenda related to Article 12.3(d) of the
text, ie whether "genetic parts and components" received from the
Multilateral System (MS) should be patentable.

After long and heated debates, delegates decided to keep the original
text -- minus the brackets -- which stipulates that "recipients shall
not claim any intellectual property or other rights that limit the
facilitated access to the plant genetic resources for food and
agriculture, or their genetic parts and components, in the form
received form the Multilateral System". Such an undertaking is to be
provided in the standard MTA adopted to regulate the facilitated
access. Both Japan and the US opposed this formulation and consequently
abstained from the final vote on the adoption of the IU. The US in
their statement during the Final Plenary noted that it would be unable
to ratify the agreement due to the restrictions it places on
innovations. Some observers have questioned the usefulness of the
Agreement if the US -- as one of the key countries involved in plant
breeding and genetic engineering -- is not bound to the Treaty's
provisions.

Canada and Japan also expressed concerns regarding the consistency
between the IT and existing intellectual property rights (IPR) regimes,
such as the WTO Agreement on Trade-Related Intellectual Property Rights
(TRIPs) and in particular Article 27.3(b) that requires Members to
grant patents on micro-organisms and non biological and microbiological
processes, and to establish some kind of intellectual property
protection for plant varieties. Some observers noted that the IT might
provide an important precedent for the unresolved discussions on the
review of Article 27.3(b) at the WTO.

Another IPR-related area concerns the IT provisions on benefit sharing
which provide for monetary contributions derived from the
commercialisation of products developed from PGRFA accessed under the
MS. The payment is mandatory when the commercialisation of the product
restricts the product's availability for use in further research and
breeding, and voluntary when the product is freely available for such
purposes. While the IT does not explicitly discriminate between IPR
holders - who are by definition conferred exclusive rights under TRIPs -
 and others, some observers speculate that it does so in practice due
to the different rules for products available for further research and
breeding and those that are not. Depending on how governments
incorporate the IT 's provisions into their IPR regulations, the
possibility might arise that they could be challenged on the basis that
in doing so, they contravene their TRIPs obligations under Articles
27.1 and 29 by imposing additional conditions for IPR protection.

Other resolved issues

Trade concerns were also raised in the context of Article 19.4(d) on
financial resources for national activities for conserving and
sustainably using PGRFA. In particular, delegates discussed a proposal
by Australia to include a reference to avoiding subsidies in the text.
Several countries opposed the reference, including Thailand which
argued that subsidies should be discussed at the WTO. The EU pointed
out that this language would introduce trade issues inconsistent with
the rest of the text. In the final text, the Article simply states that
the provision of financial resources should not be used for ends
inconsistent with the treaty, in particular in areas related to
international trade in commodities.

Delegates furthermore agreed on the text of Article 4, which deals with
the IT's relationship to other international agreements. The final text
affirms the mutual supportiveness of relevant international treaties
and the absence of hierarchies between them, thus leaving the
relationship as ambiguous as in many other international negotiations,
such as the Cartagena Protocol on Biosafety (see BRIDGES Weekly, 8
February 2000; http://www.ictsd.org/html/weekly/story4.08-02-00.htm).
Thus, it remains unclear which agreement would prevail in the case of a
dispute.

Regarding Annex I of the IT, which lists crops for inclusion in the MS,
delegates retained the list of 35 crop genera and 29 forages already
agreed to in June despite efforts by the EU to expand the list. Some
observers pointed out the paradox that a small list, as proposed by
many developing countries, would actually leave a large number of
crops, which are not included in the MS, available for patenting.
Others also questioned whether the list, be it short or long, could
actually be itself be sufficient to ensure food security, considering
that the agreement will not affect the international agricultural
trading system with its distortions, subsidies and other barriers to
market access for developing countries.

The IT is now open for signature and will enter into force 90 days
after ratification by at least 40 signatories, provided that at least
20 of the 40 signatories are Members of the FAO.

Background

In some legal jurisdictions, it is possible to patent DNA sequences and
chemical substances that have been isolated from plant material without
any structural modification. Therefore a patent holder could restrict -
subject to possible research exemptions - use of the protected sequence
or compound by others, and even access if the patent covered the method
of isolation. To some developed countries, allowing such patents is
necessary to encourage innovation and disclosure of the 'invention'.
But to many developing countries (and even some developed countries),
they legitimise misappropriation of resources to which they have
sovereign rights, and are contrary to the spirit of an international
agreement that emphasises exchange rather than appropriation.

Additional Resources

For further information on the IU's trade implications, see BRIDGES
Year 5, No. 6 (July-August 2001), p. 11
(http://www.ictsd.org/English/BRIDGES5-6.pdf). Documents of the meeting
are available at
http://www.fao.org/waicent/faoinfo/agricult/cgrfa/IU.htm. For daily
coverage, see IISD Linkages at http://www.iisd.ca/linkages/biodiv/iu-
wg/.

ICTSD Internal Files; ENB, Vol. 9 No. 213, 5 November 2001.

MEXICO BIODIVERSITY PROJECT CANCELLED FOLLOWING NGO CRITICISM

The US government on 9 November confirmed that the controversial Maya
International Cooperative Biodiversity Group (ICBG-Maya) project on
drug discovery, medical ethnobiology, biodiversity inventory, and
sustainable development among the Maya of Highland Chiapas, Mexico, has
been cancelled. The project, one of a series co-sponsored by three
United States federal agencies, the National Institutes of Health
(NIH), the National Science Foundation (NSF) and the US Department of
Agriculture (USDA), began in 1998 and was scheduled to last for five
years.

Organisations who had been strongly campaigning against the project --
including the locally-based Council of Indigenous Traditional Midwives
and Healers of Chiapas (COMPITCH) and the Canadian NGO Rural
Advancement Foundation International (now called ETC), who proceeded to
launch an international campaign to stop the project --
enthusiastically welcomed the decision. "The definitive cancellation of
the ICBG-Maya project is important for all indigenous peoples in
Mexico," said Antonio Perez Mendez of COMPITCH. "Indigenous communities
are asking for a moratorium on all biopiracy projects in Mexico," he
added. "We want to insure that no one can patent these resources and
that the benefits are shared by all."

The consortium running the project, consisting of the University of
Georgia-Athens, Colegio de la Frontera Sur (ECOSUR), and Molecular
Nature (a British biotech firm), claimed to have secured permission
from 50 communities in 15 municipalities to carry out the project's
activities, and to have received requests from eight Maya communities
to help them set up medicinal plant gardens. The drug discovery element
of the project, however, had attracted significant controversy, and the
consortium found itself faced with intense criticism for alledgedly
committing biopiracy, failing to secure the prior informed consent of
the Highland Maya to the satisfaction of these groups, and for
violating the Convention on Biodiversity and International Labour
Organization Convention 169 on Indigenous and Tribal Peoples (both of
which Mexico is a party to) as well as Mexican law, the leader of the
project.

Additional Resources

For further information, see the ECOSUR website at
http://www.ecosur.mx/icbg/default.htm.

"US Government"s $2.5 Million Biopiracy Project in Mexico Cancelled
Victory for Indigenous Groups in Chiapas", ETC GROUP, 9 November 2001,
http://www.etcgroup.org/; "Maya-ICBG Cancelled", GLOBAL EXCHANGE
CHIAPAS, 15 November 2001; "A Maya ICBG Fact Sheet", Brent Berlin,
University of Athens-Georgia, Jan. 2001.
------------------------------------------------------------------------
Biotechnology
------------------------------------------------------------------------

EU RESISTS BIOTECH DISCUSSION IN SPS COMMITTEE

At the meeting of the WTO Committee on Sanitary and Phytosanitary
Measures (SPS) on 31 October to 1 November, the US and Canada strongly
criticised Europe's continued de facto moratorium on the approval of
genetically modified organisms (GMOs), in place since 1998. The EU
reacted evasively to the criticism, arguing that the matter should
instead be discussed in the Committee on Technical Barriers to Trade
(TBT).

Despite frantic preparations for the WTO Ministerial Conference in
Doha, Qatar (9-13 November), the SPS Committee meeting was well
attended, with all the major players as well as many developing
countries and representatives from capitals present. According to one
trade source, the SPS Agreement is rapidly becoming a "hot topic" as
WTO Members are increasingly recognising the importance of SPS measures
as potential hidden trade barriers, in particular given the obligations
under the Agreement on Agriculture to reduce other protective measures,
such as export subsidies, tariffs and domestic support.

In what one trade source described as a "no-goer", the issue of GMOs
was placed on the agenda of the SPS Committee for the first time when
the US requested discussions on the European Commission's proposed
labelling and traceability regulations (see BRIDGES Weekly, 31 July
2001; http://www.ictsd.org/html/weekly/31-07-01/story5.htm) in the
context of 'non-trade concerns'. The EU, however, which had notified
the proposed rules under the TBT Agreement, refused to enter into
discussions, noting that the US should raise the matter in the TBT
Committee which deals with questions of labelling. In a second attempt
to force a discussion in the SPS Committee, the US -- supported by
Canada -- again raised the issue under the agenda item 'other
business'. The two countries strongly criticised the EU for the delay
in implementing the necessary approval procedures for GMOs which they
said had resulted in a significant trade impact. For its part, the EU
reacted strongly to the US strategy, pointing out that substantive
discussions under this agenda item contravened normal procedures and
that they were not sufficiently prepared for a response.

As one trade source speculated, the EU, which has so far been reluctant
to discuss the GMO issue at the WTO, is trying to restrict debates to
the TBT Committee, as the TBT Agreement "doesn't really have teeth to
bite them". In addition, the EU might want to avoid challenges under
the SPS Agreement in light of its loss in the beef-hormone case which
the US had brought against the EU under this Agreement (see BRIDGES
Weekly 21-03-00, http://www.ictsd.org/html/weekly/story8.21-03-00.htm).
However, the trade source also pointed out that the US would be free to
invoke the SPS Agreement in a dispute and that the EU could find it
difficult to justify that its proposed regulations do not fall within
the scope of the Agreement.

Despite efforts by the European Commission to convince EU member states
to lift the moratorium on GMO approvals, many EU member states have
refused to do so until appropriate labelling and traceability
regulations are in place. It will take at least another two years,
however, until these regulations will enter into force (see BRIDGES
Weekly, 30 October 2001; http://www.ictsd.org/weekly/01-10-
30/story4.htm).

The next meeting of the SPS Committee is currently scheduled for 20-21
March 2002.

Background

The SPS Agreement has two objectives, aiming to (i) recognise the
sovereign right of Members to provide the level of health protection
they deem appropriate, and (ii) ensure that SPS measures do not
represent unnecessary, arbitrary, scientifically unjustifiable, or
disguised restrictions on international trade. While requiring SPS
measure to be based on science, the Agreement also allows WTO
Members "in cases where relevant scientific evidence is insufficient"
to provisionally adopt SPS measures. In such cases, Members are
instructed to seek to obtain additional information necessary for a
more objective risk assessment "within a reasonable period of time"
(Art. 5.7). The Agreement furthermore encourages Members to base their
SPS measures on international standards, guidelines and recommendations
where they exist, recognising the Codex Alimentarius Commission (food
safety), the Office International de Epizooties (OIE; animal health)
and International Plant Protection Convention (IPPC; plant health) as
international standard-setting bodies.

ICTSD Internal Files.

------------------------------------------------------------------------
In Brief
------------------------------------------------------------------------

CBD ADVISORY BODY DISCUSSES FOREST TRADE

At the seventh meeting of the Convention on Biological Diversity's
Subsidiary Body on Scientific, Technical and Technological Advice
(SBSTTA-7) (12-16 November), discussions focused mainly on forest and
to some extent agricultural biodiversity. The deliberations on forest
biodiversity covered a broad range of issues including trade, illegal
harvesting, and the rights of indigenous peoples and local communities.
The outcome of the meeting was a series of recommendations for the
consideration of the CBD Conference of the Parties (COP) at its next
meeting on 8-26 April 2002. The forest biodiversity recommendation
outlines a suggested work programme, consisting of three elements,
namely conservation, sustainable use and benefit sharing; institutional
and socioeconomic enabling environment; and knowledge, assessment and
monitoring. Among other issues, the work programme explicitly reflects
the need to prevent the illegal importation of non-timber forest
products not covered by the Convention on International Trade in
Endangered Species of Fauna and Flora (CITES). Subject to its adoption
by the COP, it would also investigate the impacts of illegal logging
and trade. Documents of the meeting are available at
http://www.biodiv.org/doc/meeting.asp?lg=0&wg=sbstta-07. For daily
coverage, see IISD Linkages at
http://www.iisd.ca/linkages/biodiv/sbstta7/

US KEEPS UP PRESSURE ON JAPAN TO HALT WHALING

In response to the departure of the Japanese whaling fleet from
Shimonoseki on 5 November, the US continued to put pressure on Japan to
halt the annual hunt on Antarctic minke whale. Voicing the only
significant official international criticism of the Japan's 2001-2002
whale hunt, US State Department spokesman Richard Boucher said that the
US strongly backed international calls on Japan to stop the hunt, which
Japan claims is only carried out for scientific purposes. Japan's
decision to continue whaling despite concerns expressed by the
International Whaling Commission (IWC) regarding a possible decline of
the minke population was also strongly condemned by environmental
groups. Greenpeace furthermore accused Japan of trying to obtain
support from other nations ahead of the next meeting of the IWC in May
2002. "Japan wants a return to high seas whaling with factory ships,
and it's willing to use bribery to get it," said John Bowler,
Greenpeace campaign coordinator. "U.S. Pressures Japan to Stop Minke
Whale Hunt," ENS, 13 November 2001.

------------------------------------------------------------------------
Events & Resources
------------------------------------------------------------------------

EVENTS

For a more comprehensive list of events in trade and sustainable
development, please refer to ICTSD's web calendar at:
http://www.ictsd.org/html/calendar.htm.

19-24 November, Bangkok, Thailand: FISH FOR PEOPLE. Conference on
Sustainable Fisheries for Food Security in the New Millennium,
organised by the ASEAN-South East Asian Fisheries Development Centre
(SEAFDEC). For further information, contact the Conference Secretariat,
fax (66 2 ) 940 6336; email: secretariat@seafdec.org; Internet:
http://www.seafdec.org/

25-30 November, Taiwan: 6TH ASIAN FISHERIES FORUM - TRIENNIAL MEETING
OF THE ASIAN FISHERIES SOCIETY. The Forum will address various issues
facing fisheries scientists and managers on a regional and global
level, and will hold round table talks concerning the Asian sector's
future, including capture fisheries, aquaculture and processing. For
more information, contact: Mr. John Cooksey, tel: (1 760) 432-4270;
fax: 432-4275; email: meetingmanager@aol.com; Internet:
http://www.afs.tfrin.gov.tw or http://www.tfrin.gov.tw/AFS

26-30 November, Helsinki, Finland: AD HOC WORKING GROUP ON THE
INTERLINKAGES BETWEEN BIOLOGICAL DIVERSITY AND CLIMATE CHANGE. For
further information contact: CBD Secretariat, Montreal, Canada; tel:
(514) 288-2220; fax: 288-6588; e-mail: secretariat@biodiv.org;
Internet: http://www.biodiv.org. From Linkages:
http://www.iisd.ca/linkages/journal/.

26 - 30 November, Montreal, Canada: GPA 2001 INTERGOVERNMENTAL REVIEW
MEETING. Organised by UNEP's Global Program of Action for the
Protection of the Marine Environment from Land-based Activities. For
further information, contact the GPA Coordination Office, tel: (31 70)
3114460; fax: 345 6648; email:gpa@unep.nl; Internet:
http://www.gpa.unep.org/igr/

27-28 November, Geneva, Switzerland: WTO COUNCIL ON TRADE-RELATED
ASPECTS OF INTELLECTUAL PROPERTY RIGHTS (TRIPS).

27-29 November, Phnom Penh, Cambodia: WORLD SUMMIT ON SUSTAINABLE
DEVELOPMENT ASIA PACIFIC PREPARATORY MEETING. For further information
contact: Hiroko Morita-Lou, UN-DESA, New York; tel: (212) 963-8813;
fax: 963-4260; email: morita-lou@un.org; Internet:
http://www.johannesburgsummit.org/web_pages/asia_pacific.htm.

27-30 November, Raleigh-Durham, US: LMOs AND THE ENVIRONMENT: AN
INTERNATIONAL CONFERENCE. The Organisation for Economic Co-operation
and Development (OECD) will host a conference to promote dialogue
between developed and developing countries on the underlying science
for assessing transgenic organisms in the environment. For further
information contact: OECD; tel: (33 1) 4524-8097; fax: 4524-9437;
email: RaleighConference@oecd.org; Internet:
http://www1.oecd.org/ehs/raleigh/index.htm.

28-29 November, Montevideo, Uruguay: SYMPOSIUM ON THE INTERNATIONAL
PROTECTION OF GEOGRAPHICAL INDICATIONS. Organised by the World
Intellectual Property Organization (WIPO) and the National Directorate
for Industrial Property (DNPI), Ministry of Industry, Energy and Mining
of Uruguay. For further information contact: WIPO Secretariat, tel: (41
22) 338-9428; email: francis.gurry@wipo.int; Internet:
http://www.wipo.int/eng/meetings/2001/geo_mvd/index.htm.

29 November - 1 December, Flores, Peten, Guatemala: SECOND
INTERNATIONAL MEETINGS OF SCIENTISTS: "PEASANT ECONOMY AND CHALLENGES
FOR SUSTAINABLE DEVELOPMENT IN THE SOUTHERN MAYA LOWLANDS OF GUATEMALA,
MEXICO AND BELIZE." For further information contact: Silvel Elias at
selias@flacso.edu.gt.

Other Forthcoming Events

5 December, Geneva, Switzerland: UNEP/GEF BIOSAFETY PROJECT: A BRIEFING
ON GOALS AND ACTIVITIES. The UNEP/GEF Biosafety Project will host this
meeting to promote regional and sub-regional collaboration on issues
relevant to developing countries' national biosafety frameworks. For
further information, contact: The International Environment House; tel:
(41-22) 917-8505; fax: 797-3464; email: info@environmenthouse.ch;
Internet: http://www.environmenthouse.ch.

10-14 December, Geneva, Switzerland: WIPO SECOND SESSION OF THE
INTERGOVERNMENTAL COMMITTEE ON INTELLECTUAL PROPERTY AND GENETIC
RESOURCES, TRADITIONAL KNOWLEDGE AND FOLKLORE. The following are on the
agenda for this meeting: "Accreditation of certain Non-Governmental
Organizations," "Operational Principles for Contractual Agreements
Concerning Access to Genetic Resources and Benefit-
Sharing," "Traditional Knowledge" which includes a review of current
IPR protection, Folklore, and Future Work. For further information
contact: WIPO Secretariat, tel: (41 22) 338-9428; email:
francis.gurry@wipo.int; Internet:
http://www.wipo.int/eng/meetings/2001/igc/index_2.htm.

13-17 May 2002, Maracay, Venezuela: BIOSAFETY 3 - ADVANCED ISSUES ON
BIOSAFETY: RISK MONITORING AND PUBLIC PERCEPTION OF BIOTECHNOLOGY.
Organised by Centro Nacional de Investigaciones Agropecuarias/CENIAP
(Maracay, Venezuela) and Centro Tecnológico Polar (Caracas, Venezuela).
Postponed from 12-16 November 2001. For further information, contact:
Dr. Efrain G. Salazar Yamarte; tel: (58-43) 471066; fax: 471066,
831421; email: efra63@hotmail.com; Internet:
http://www.icgeb.trieste.it/~bsafesrv/bsfn0011.htm.

RESOURCES

If you have a relevant resource (books, papers, bulletins, etc.) you
would like to see announced in this section, please forward a copy for
review by the BRIDGES staff to hbaumuller@ictsd.ch.  Submissions of
publications to ICTSD's documentation centre would also be welcome
(contact mgalvin@ictsd.ch).

HARD FACTS, HIDDEN PROBLEMS: A REVIEW OF CURRENT DATA ON FISHING
SUBSIDIES. Published by WWF, October 2001. The report concludes that
fishing industry subsidies worldwide amount to US$15 billion per year,
as opposed to the US$13 billion reported by governments, with Japan
having the highest fishing subsidy levels, followed by the EU, the US,
and China. Available online at
http://www.panda.org/endangeredseas/publications/hardfacts_oct26.pdf.

TRADING AWAY THE LAST ANCIENT FORESTS: THE IMPACTS ON FORESTS OF TRADE
LIBERALISATION MEASURES BY THE WTO. By R.G. Tarasofsky and S. Pfahl,
Ecologic - Institute for International and European Environmental
Policy, on behalf of Greenpeace International, November 2001. Available
at http://www.greenpeace.org/politics/wto/Doha/reports/wto.pdf.

INTELLECTUAL PROPERTY IN BIODIVERSITY AND AGRICULTURE. Edited by Peter
Drahos and Michael Blakeney. Published by Sweet and Maxwell, November
2001. The essays in this volume draw attention to a broad set of global
biodiversity-related regulatory agendas with which intellectual
property rights are now irrevocably linked, and address aspects of the
failure to address the difficult relationship between intellectual
property and the regulation of food, agriculture, the environment, and
health. Further information is available online at: http://
http://www.sweetandmaxwell.co.uk/products/cat/mydetails.cfm?
title=107625&detail=126830.

"The economic consequences of alien plant invasions: examples of
impacts and approaches to sustainable management in South Africa," by
B.W. van Wilgen et al, in ENVIRONMENT, DEVELOPMENT AND SUSTAINABILITY, 3
(2), 2001: 145-168. The paper reviews what is known of the economic
consequences of alien plant invsions in South Africa. These economic
arguments have been used to successfully launch the largest
environmental management programme in Africa.

"Ecologically unsustainable trade," by J. O. Andersson and M. Lindroth
in ECOLOGICAL ECONOMICS, 37 (1, 2001): 113-122. In this article, the
ecological footprint concept is used to distinguish different types of
ecologically unsustainable trade, but the issue of the possible effects
of trade on the ecological footprints is also raised. The authors argue
that since international trade can be a subtle mechanism by which
ecological sustainability is preserved locally by means of importing
biomass and sink-capacity from other countries, it can also blur the
view of responsibility for the ecological effects of production and
consumption. At the end of this article, some ethical and political
dilemmas related to these issues are raised.

FOOD FOR ALL: CAN HUNGER BE HALVED? By the Panos Institute, 2001. The
report, inter alia, looks at the question whether trade liberalisation
should be seen as part of the solution to world hunger, or part of
the problem. Available online at
http://www.panos.org.uk/food_for_all.htm.

Electronic Resources

INTERPORTAL.CH. This internet portal for cooperation and development
was implemented by the Swiss Coalition of Development Organisations,
Erklärung von Bern, cinfo, Swissaid and the Swiss Tropical Institute,
and will involve over 30 organisations, including charities, political
and cultural organisations. Interportal.ch aims to enable a wide range
of groups to exchange varied information and to network by providing up-
to-the-minute news, background reports, as well as campaign and event
announcements. The main language of the portal is German, with French
and English versions to be introduced over time. For further
information, see http://www.interportal.ch
------------------------------------------------------------------------
BRIDGES Trade BioRes© is published by the International Centre for
Trade and Sustainable Development (ICTSD), http://www.ictsd.org, in
collaboration with IUCN - World Conservation Union, http://www.iucn.org,
and IUCN's Commission on Environment, Economic and Social Policy, CEESP,
http://www.cenesta.org/ceesp/.

This edition of BRIDGES Trade BioRes was co-edited by Graham Dutfield,
gdutfield@ictsd.ch, and Heike Baumuller, hbaumuller@ictsd.ch. The
Managing Editor is Andrew Crosby, acrosby@ictsd.ch. The Director is
Ricardo Meléndez-Ortiz, rmelendez@ictsd.ch. ICTSD is an independent,
not-for-profit organisation based at: 13, ch. des Anémones, 1219 Geneva,
Switzerland, tel: (41-22) 917-8492; fax: 917-8093. Excerpts from
BRIDGES Trade BioRes may be used in other publications with appropriate
citation. Comments and suggestions are welcomed and should be directed
to the Editors or the Director.

BRIDGES Trade BioRes is made possible in 2001 through the generous
support of the Minister of Housing, Spatial Planning, and the Environment
Netherlands). It also benefits from ICTSD's core funders: the Governments
of Finland, Denmark, the Netherlands and Sweden; Christian Aid (UK),
IUCN - The World Conservation Union, MISEREOR, NOVIB (NL), Oxfam (UK)
and the Swiss Coalition of Development Organisations (Switzerland).

24.11.2001

. A New Trade Round, Virtually

Volume 18 - Issue 24, Nov. 24 - Dec. 07, 2001
India's National Magazine
from the publishers of THE HINDU

Table of Contents
COVER STORY
A NEW TRADE ROUND, VIRTUALLY
At the end of much posturing and tough talk, the Fourth Ministerial Meeting of the World Trade Organisation in Doha produces a mixed outcome. And India's lone hand had a crucial role to play in the deal.
SUKUMAR MURALIDHARAN

in Doha

LATE on the evening of November 13, the scene at the Sheraton Hotel in Doha suggested nothing so much as a crucial conference plummeting towards failure. Delegates and officials to the Fourth Ministerial Meeting of the World Trade Organisation (WTO) were bargaining furiously over a draft declaration that had been prepared earlier in the day to the satisfaction of the United States, the qualified approval of the European Union (E.U.), and the barely concealed rage of the developing world.

PATRICK BAZ/ AFP
At the closing ceremony of the WTO conference in Doha.

Having yielded the previous day in approving a declaration on the centrality of public health concerns in enforcing the WTO's patents regime, the U.S. had seemingly earned the mantle of the honest broker. But the E.U. was playing hardball. As rumours swirled around the conference centre of a pullout threat from French President Jacques Chirac, the E.U. was holding firm to its insistence on deleting a reference to the objective of phasing out export subsidies in agriculture. And despite being the only outlier on this issue, the E.U. was playing for high stakes on other fronts, in demanding an explicit acknowledgment that negotiations on a bundle of issues of special interest to European corporations would begin no later than the next Ministerial Conference.

Developing countries were equally adamant that there could simply be no presumption that the WTO could venture into these areas - collectively known as the Singapore issues since the Second Ministerial Conference of the WTO in 1996 approved of a study programme in them. Negotiations on investment, competition policy, government procurement and trade facilitation were potentially deeply intrusive on national decision-making processes. And even as the developing countries were engaged in studying the deeper implications of the Singapore issues, they could not be herded into a commitment on negotiating them.

The Africa, Caribbean and Pacific (ACP) grouping had welded this concern onto another one - over the possibility that WTO rules on uniformity of trade rules would lead to the removal of a special waiver that it enjoyed in exports to E.U. markets. Bewildered by the complexities involved, New Zealand's Trade Minister withdrew from the fray late that evening. He chose to spend his time in the cavernous lobby of the Doha Sheraton playing out a pensive tune on the grand piano. His befuddlement and urge for relief was widely shared.

But the WTO was not about to give in. After the fiasco of the Seattle Ministerial Conference in 1999 (Frontline, December 24, 1999), a second consecutive failure was simply too terrible an eventuality for it to face. The U.S. and the E.U., which have found the WTO a convenient instrument to render the multiplying complexities of the world into some semblance of simplicity and order, had to make that extra effort. And as the night wore on the full repertoire of feint and manoeuvre, coercion and cajolery, was brought into play.

Late in the night, the ACP grouping won the assurance that its special waiver in E.U. markets would be sustained. Concurrently, promises of technical assistance for capacity building - in the over-used cliche of trade diplomacy - won the undertaking that the least developed countries (LDCs) and the Africa bloc would contain their dissent over the Singapore issues. Then an acknowledgment by the E.U. that it would not be averse to the objective of phasing out export subsidies in agriculture provided that the outcome of negotiations were not prejudged, seemed to eliminate another obstacle to agreement.

India then stood well and truly isolated. Early on November 14 it was presented a draft declaration that put in place all the issues that it had spared no effort to remove from the WTO's negotiating agenda. Crunch time had come and the Indian delegation without further heed to diplomatic delicacy made it known that it was on the verge of voting with its feet. Commerce Minister Murasoli Maran, as the leader of the delegation, informed the conference that India would not agree to a consensus. The next step in the battle engagement called for blocking the process of placing the declaration before the Ministerial Conference. And finally in the contingency plans that were being hatched in those feverish hours, the Indian delegation would complete its pull-out from Doha, presumably leaving the WTO in chaos and disarray.

U.S. Trade Representative Robert Zoellick (left) with E.U. Trade Commissioner Pascal Lamy (standing) during the final session.

Apart from the blow to the WTO's credibility, such an outcome would have constituted a serious loss of face for the conference organisers. Finally, it was the conference chairman, Qatar's Minister for Industry and Commerce Sheikh Youssef Hussein Kamal, who came up with the formulation that clinched the deal. While placing the declaration before the Ministerial Conference, Sheikh Kamal issued a clarification in two paragraphs. This was to the effect that the Singapore issues would be taken up for negotiations after the next Ministerial Conference only on the basis of a decision to be taken then by explicit consensus. This meant that each WTO member would be at liberty to take a position on modalities that could prevent negotiations from proceeding until that Member (was) prepared to join in.

The final declaration now contains the same formula on all four Singapore issues, that Ministers agree that negotiations will take place, after the Fifth Session of the Ministerial (Conference) on the basis of a decision to be taken, by explicit consensus, at that Session on modalities of negotiations. This seems to presume that negotiations will take place, with a decision being awaited only on modalities. It is in this sense, perhaps a relatively stronger assertion than the earlier draft, which said that the Fifth Ministerial Conference would decide whether negotiations should take place. But with the Chairman's clarifications appended, India was willing to accept the final declaration as an adequate compromise in order to win the E.U.'s concurrence on the agriculture text.

Ironically, however, no sooner had the conference concluded than the U.S. delegation began casting doubt over the long-term negotiating consequence of the Chairman's declaration. The final declaration, said a trade official cited by the policy journal Inside U.S. Trade, is the governing document of the conference. It alone will set the agenda for the future work of the WTO.

Similar polarities in interpretation were evident also with regard to the declaration on agriculture. The Cairns group of major agricultural exporters called it an unequivocal triumph against E.U. recalcitrance. The E.U. likewise claimed victory in having eliminated all discussion about the end point of negotiations in agriculture. These rather mixed assessments are perhaps inevitable. But they also highlight how the WTO agenda is always a work in progress, continually flowing into certain new areas and ebbing away from others in response to the compelling needs of its most powerful members. India may have won a reprieve on the Singapore issues, but the study programme sanctioned in 1996 will continue. And with WTO personnel being actively engaged in the research effort, the findings of the study could well be pre-ordained. A momentary lapse of attention on the part of the developing countries may be all that is required for these issues to make their appearance as full-blown items for negotiations on the WTO's slate.

Expectations were mixed when the Ministerial Meeting began on November 9 amidst high security in the capital city of the Gulf kingdom of Qatar. The U.S. delegation, ringed by layers of security, had been considerably reduced in size as a consequence of the September 11 terrorist attack and its aftermath. But in insisting that the conference would not be postponed and would be held at the venue that was decided in February, the U.S. was giving an obvious indication of the importance it placed on the occasion.

The U.S. and the E.U. had both stated their intention to see that a new round of global trade negotiations was kicked off at Doha. Preliminary briefings by the two sides made it apparent that conflicting perceptions and priorities divided them. The U.S.' principal concern, as elaborated by senior trade officials just prior to the conference, was market access in the most general sense, with trade in agriculture being earmarked for special attention.

RABIH MOGHRABI/ AFP
Mike Moore, Director-General of the WTO.

Early statements of the U.S.' negotiating posture were interpreted as a direct challenge to the E.U., which continues to maintain the most comprehensive system of agricultural subsidisation possible under WTO rules. The E.U. for its part responded aggressively, with the assertion that it would support a programme of agricultural trade liberalisation provided that it benefited all. Even before the formal inauguration of the conference, delegations were grappling over the language of a Draft Ministerial declaration jointly prepared late in October by Mike Moore, WTO Director-General and Stuart Harbinson, the Ambassador of Hong Kong (China) and president of the WTO General Council. This text, called the Harbinson Draft, was a catalogue of a number of subjects and priorities for action by the WTO as part of an expanded work programme, which many developing country delegations believed referred to a new trade round by another name.

On agriculture, the Harbinson text affirmed that the WTO's priority would be to initiate reductions of, with a view ultimately to phase out, all forms of export subsidies. The E.U. placed on record its reservations about this clause right at the outset, but in order not to hobble the discussions, expressed its willingness to go along with a programme of subsidy reduction provided all forms of trade distortions were disciplined. As elaborated by E.U. Agriculture Commissioner Franz Fischler, these would include export credits and the use of food aid not to relieve suffering but to dispose of surpluses, open up markets (and) drive out competitors.

THESE subtle manoeuvres between the U.S. and the E.U. on the question of agriculture provided an early pointer to the direction in which the talks would move. The E.U. was evidently determined to hold out on agriculture in an overture for the U.S.' support on the Singapore issues, as also environment and labour. India had vocally expressed its opposition to the new issues, but other developing countries were expected to acquiesce. Arriving at Doha amidst a chorus of media comment about India's isolation, Murasoli Maran soon discovered substantial support for its position. Most developing countries were convinced that the WTO should handle the issues of implementation of existing agreements before taking on a broader negotiating agenda. But during informal interactions with the media Maran was careful to underline that these principles, bilaterally agreed between developing countries, might not stand up within the hard bargaining of the Ministerial Meeting.

Apart from the contentious issue of subsidies, the E.U. had staked out a lone position in insisting that environment, rural development and food safety should also feature in the agriculture negotiations. This was viewed by other member-states as a thinly disguised protectionist device. The U.S. likewise was alone in its belief that the anti-dumping provisions of the WTO agreement were not in need of review. Among the developed countries Japan was known to have a grievance on this score and seemed likely to join the E.U. in wielding anti-dumping as a weapon against the U.S.' resolve to curb their agricultural subsidies.

Among the implementation issues of concern to India, the Harbinson text proposed that the pace of dismantling textile export quotas and integrating textiles and clothing into the WTO framework could be accelerated. In the area of agriculture there was a recognition that the green box subsidies, that is, those subsidies that are employed to safeguard food entitlements and ensure nutritional security to the vulnerable, should be exempted from reduction commitments. The Harbinson text, though, remained in the main quite oblivious to developing country interests.

ADDRESSING the opening plenary, Maran sharply attacked the Draft declaration, characterising it as neither fair nor just. He also took issue with the tone of the letter that had been addressed to the member-states by Moore, while forwarding the Draft declaration for consideration. Disregarding the reservations expressed by various countries, the Director-General had in his letter made out a case for quick agreement on the terms listed in the Draft declaration, saying that it represented a near-consensus among the member-states. This failed to reflect the substantive differences that had been stated and reiterated, said Maran.

V.V. KRISHNAN
Murasoli Maran, India's Commerce Minister.

The Doha Ministerial had the opportunity to provide a strong impetus to ongoing negotiations on agriculture and services as also to accelerate the process of reviewing existing agreements. These negotiations had already been mandated and could not be held hostage to unreasonable demands that new issues be brought on board the WTO agenda, said Maran. The WTO is not a global government, he continued, and it should not seek to arrogate to itself responsibilities that legitimately belong to national governments and legislatures.

Maran's intervention was rightly regarded as a signal that the Doha Ministerial Conference continued to face unbridgeable gaps of perception. This was pointedly if unwittingly emphasised by Robert Zoellick, the U.S. Trade Representative who led his country's delegation to Doha. Articulating U.S. priorities on market access for agriculture, industrial goods and services, Zoellick praised the draft declaration as a document that skilfully cleared many impediments to the opening of a new round.

E.U. Trade Commissioner Pascal Lamy made a direct pitch for the allegiance of the developing countries. In his address to the plenary, Lamy sought to mitigate the anxieties about a new round of negotiations by couching it in the phraseology of a development agenda. The language undoubtedly appealed to the developing countries, though the details were far from agreed. At one of several media interactions, Iddi Mohammad Simba, the Tanzanian Minister for Trade, described a development agenda as a desirable outcome of Doha. But speaking on behalf of the less developed countries, the ACP and the Africa bloc, Simba placed on record his allergy for the notion of a new round. "We do not have the capacity to negotiate on the new issues," he said, "and there was a noticeable lack of will on the part of the developed countries to talk of a development agenda in the absence of these issues." The LDCs, the ACP and the Organisation of African Unity remained opposed to a new round of trade negotiations in the sense of a single undertaking, that is, a multiplicity of agreements all of which have to be accepted or rejected in their totality. What was required, said Simba, was a sequencing of the negotiations, an ordered priority that would put development first.

IN procedural terms, the negotiations at Doha kicked off with an innovative feature. The infamous green room, where the decisive bargains would be struck between key players and recalcitrant elements would be summoned for inquisitorial hectoring, was done away with. After the collapse at Seattle, the green room had been denounced by several members of the WTO as an undemocratic and medieval feature. In its place the conference chairman, in consultation with the WTO Director-General, appointed six facilitators (or friends of the chair) who would coordinate the discussions.

RAVEENDRAN/ AFP
CPI(M) Polit bureau member Sitaram Yechury, former Prime Minister V.P. Singh, CPI(M) general seceratary Harkishan Singh Surjeet and Samajwadi Party leader Mulayam Singh Yadav at an anti-WTO rally in New Delhi.

Visiting Trade Ministers from South Africa, Canada, Mexico, Venezuela, Singapore and Switzerland were appointed facilitators in six key areas. In a crucial intervention in the WTO Committee of the Whole - which is the final decision-making body in the Ministerial Conference - Maran emphasised the need for the facilitators to follow a completely transparent process in eliciting opinions. The facilitators in turn should present a text to the Committee of the Whole only if there is consensus, he said. Failure to forge a consensus should be duly reported to the Committee. There must be no attempt to presume a consensus where none exists, and as a precaution against the manufacture of consensus Maran demanded that all delegations be given an opportunity to scrutinise the texts of the facilitators' reports before they were presented to the Committee. The Indian Minister's intervention was broadly endorsed by a large group of developing countries, though it was flagrantly disregarded as pressure mounted to produce an agreed outcome.

Signalling further the deep divisions, Japan on the second day of the conference reacted strongly to U.S. suggestions that it was not showing sufficient flexibility and leadership in the negotiations on agriculture. It also chose to reiterate its reservations over the U.S. proposal to broaden the discussion on anti-dumping rules to bring the alleged unfair trade practices of other member-states under scrutiny. Till the third day all participants were doing little else than repeating their well-known and inflexible positions. Early on the fourth day, a compromise text on Trade-Related Aspects of Intellectual Property rights (TRIPS) and access to essential medicines was worked out in a nine-member sub-group and referred to a wider committee. A considerably modified version, with certain sections reflecting persisting disagreements, was placed before the Committee of the Whole that evening.

HUSSEIN MALLA/ AP
An anti-WTO protest in Doha on November 13.

In the unique bargaining procedures used in the WTO, where nothing is agreed until everything is agreed, it seemed likely that agreement on the medicines issue could break the deadlock in other areas. But these remained unfulfilled. India and other developing countries continued to encounter resistance in the textiles negotiations. The U.S. and Canada stuck to their insistence that the proposal to accelerate the elimination of quotas amounted to an amendment of the existing Agreement on Textiles and Clothing (ATC). The E.U. continued to support the declaration on textiles, on the understanding that it only involved the full utilisation of existing flexibilities in the ATC. Japan, while remaining loftily unconcerned over this argument since it maintained no textiles quotas, expressed pessimism about the prospects of a deal. And in an evident effort to ratchet up the pressure, Maran characterised the persistent stalemate in textiles as a potential deal-breaker.

With the compromise text on TRIPS and essential medicines clinched, the U.S. had seemingly relieved itself of its most onerous negotiating burden. It was now free to use its good offices and coercive power to stitch together a deal. It was clearly amenable to bringing on board the Singapore issues if it could induce the E.U. to back down on agriculture. It was also keen to see Japan relent on anti-dumping measures. And if when the final day of the conference dawned the latter deal seemed closer to realisation than it was at the beginning, the former seemed as elusive as ever.

The E.U. was if anything only hardening its position, refusing to give any ground on the Singapore issues. As the last day of scheduled talks began, an E.U. spokesperson brusquely brushed aside the reservations repeatedly expressed by the LDCs about the new issues as being dilatory and diversionary. With surpassing manipulative skill it had worked overnight with the U.S. in presenting a Draft declaration - the third draft in conference shorthand - that was a virtual and exclusive charter of its demands.

The Indian delegation was incensed. Speaking at the final plenary, Maran chose a relatively moderate-register idiom to present India's disagreement, expressing his strong sense of disappointment at the third draft. The declaration, he said, failed to reflect India's concerns and demands in a substantive manner. Maran identified the weak provisions on implementation of the Uruguay Round agreements as one of the specific shortcomings in the third draft. In comparison to the Harbinson text, the third draft that had been placed before the Committee of the Whole represented a considerable dilution on implementation issues. It placed the entire section on textiles, for instance, within square brackets, indicating that there had been no agreement on it.

The draft declaration also put in stronger preambular language on the issue of environment and trade. It removed a crucial qualifying phrase, thus recognising the International Labour Organisation (ILO) as the appropriate forum for a substantive dialogue on trade and labour standards. On the issues of investment, competition policy, government procurement and trade facilitation, the third draft mandated either immediate negotiations or a decision at the next Ministerial Conference on beginning negotiations. Expressing a sentiment that was widely shared by developing countries, Maran told the plenary that all this was premature, since the decision on negotiations could only be taken after the results of the study programme authorised by the Singapore Ministerial Meeting of the WTO were known.

India was also concerned about the single undertaking clause of the declaration, which stipulated that negotiations in all areas - including the implementation of the Uruguay Round - would be conducted, concluded and enforced as a package involving all members. This effectively meant that in order to obtain a discussion on the implementation of the Uruguay Round India would have to begin negotiations in areas as diverse as investment, competition policy and perhaps even environment and labour.

AFP
Chinese Foreign Trade and Economic Cooperation Minister Shi Guangsheng signs his country's accession to the WTO.

Till late in the evening of November 13, the Ministerial Plenary remained deadlocked. The E.U. showed no sign of relenting from its insistence that the clause on phasing out export subsidies in agriculture should be deleted. It was also raising the stakes by demanding stronger language on environment, labour and the so-called Singapore issues. The U.S. and Japan were in relative terms the least dissatisfied with the third draft. Since the declaration on essential medicines, the U.S. had managed to position itself as a credible broker for a comprehensive deal. But its insistence on not conceding ground on textiles removed a vital element of flexibility in the bargaining process. Japan had for its part worked out a compromise agreement with the U.S. on the use of anti-dumping measures. But even with movement along these directions, the Doha Ministerial remained deadlocked between the E.U.'s insistence on more than the developing countries could yield and the U.S.' reluctance to relieve pressure by granting crucial concessions of interest to the developing countries.

As often happens, minds were focussed by the possibility of failure. And an expedient of rather dubious value - the conference chairman's prefatory statement to the tabling of the final declaration - was deployed to wear down India's resistance. Nomenclature is of course not of any great consequence. It is not yet clear that the negotiations that will begin in the WTO's expansive offices in Geneva early next year will be called a new trade round. These are more likely, as a verbal concession to mitigate the material injuries that are likely to be caused to the poorer countries, to be called the Doha Development Agenda. But for India the negotiations on market access in industrial products will be crucial. With a large number of industrial tariff lines remaining unbound, India will be compelled to undertake binding commitments beyond which customs duties will not be raised. Whether these amount to a new round or not is a matter of terminology. But clearly, a period of wrenching adjustment is foretold for Indian industry, as also for agriculture and services.