THE ROLE OF THE WTO IN PROMOTING GLOBAL PARTNERSHIP FOR DEVELOPMENT (MDG 8, FB DANQUAH

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Content: University of Ghana http://ugspace.ug.edu.gh THE ROLE OF THE WTO IN PROMOTING GLOBAL PARTNERSHIP FOR DEVELOPMENT (MDG 8)
BY FREDERICK BOAKYE DANQUAH (10228685)
THIS DISSERTATION IS SUBMITTED TO THE UNIVERSITY OF GHANA, LEGON, IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE AWARD OF THE MASTER OF ARTS DEGREE IN INTERNATIONAL AFFAIRS
LEGON
DECEMBER 2014
University of Ghana http://ugspace.ug.edu.gh DECLARATION I hereby declare that this dissertation is an outcome of an original research conducted under the supervision of Dr. Vladimir Antwi-Danso and has not previously in its entirety or in part been submitted anywhere for any other purpose.
.............................................................. FREDERICK BOAKYEDANQUAH (STUDENT)
......................................... DR. VLADIMIR ANTWI-DANSO (SUPERVISOR)
DATE:..............................
DATE:.............................
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University of Ghana http://ugspace.ug.edu.gh DEDICATION This dissertation is dedicated to my late father, Mr. Kwaku Acheampong and the newly-born twins, Kwabena Asamoah Acheampong Snr. and Kwabena Asamoah Acheampong Jnr. To make use of my Spanish phrases, I say "Que Dios te mantenga, Papito mio y Que Dios os bendiga, chicos". ii
University of Ghana http://ugspace.ug.edu.gh ACKNOWLEDGEMENTS I would like to express my profound gratitude to God Almighty for the strength, energy, knowledge and protection He granted me throughout the duration of the course at LECIAD and particularly in writing this thesis. My thanks go to my supervisor, Dr. Vladimir Antwi-Danso for his inspiration and constructive comments throughout the period of this research. Special thanks also go to the Director, Research Fellows and the librarians at LECIAD for their expert input, direction and help during my time of study. I would also like to extend my profound gratitude to the Research Department, Ministry of Foreign Affairs and Regional Integration for giving me this opportunity. And to Dr. Yao Graham, Dr. Douglas Dzormelo, Mrs. Patience Agyare-Kwabi and all the 2014 Class of LECIAD, I say thanks for the support in writing this thesis and throughout this course. To my family, especially my mum, Grace Owusu, friends and acquaintances, thanks for being there for me. iii
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ADVANCE ADP AfDB AfT AGOA AIDS AoA BTAs BUSAC CAP DCs DDA DFID DFQF DIE DWP EBA EDP EIF EMQAP EPA EPZ EU
LIST OF ABBREVIATIONS AND ACRONYMS Agriculture Development and Value Enhancement agricultural development Policy African Development Bank Aid for Trade African Growth and Opportunity Act Acquire Immune Deficiency Syndrome Agreement on Agriculture Bilateral Trade Agreements Business Sector Advocacy Challenge Common Agricultural Policy Developing Countries Doha Development Agenda Department for International Development Duty-Free and Quota-Free German Development Institute Doha Work Program Everything But Arms Export Development Programme Enhanced Integrated Framework Export Marketing and Quality Awareness Project Economic Partnership Agreement Export Processing Zone European Union iv
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FAO FDI FTA FtF G-33 GATT GATS GDP GSP HDR HIV ICFG ICTSD IDIEC IFPRI IMF IPRs ITO JITAP LDCs MCTI MDGs METSS MFN MOAP
Food and Agriculture Organization Foreign Direct Investment Free Trade Area Feed the Future A Group of Thirty-three Developing Countries General Agreement on Tariffs and Trade General Agreement on Trade in Services Gross Domestic Product Generalized System of Preferences human development Report Human Immune Virus Integrated Coastal and Fisheries Governance International Centre for Trade and Sustainable Development Inclusive Development International and Equitable Cambodia International Food Policy Research Institute International Monetary Fund Intellectual Property Rights International Trade Organization Joint Integrated Technical Assistance Project Least developed countries Ministry of Commerce, Trade and Industry Millennium Development Goals Monitoring, Evaluation, and Technical Support Services Most Favoured Nation Market Oriented Agriculture Programme v
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MSDP MTS NAMA NDS NS NT NTBs NTMs ODA PACRO PRS PSDS RTAs SADC SDT SPS SS SSM STDF TACB TDS TNCs TRIPS TRS UPSF
Mining Sector Diversification Programme Multilateral trading system Non-Agricultural Market Access National Development Strategy North-South National Treatment Non-Tariff Barriers Non-Tariff Measures Overseas Development Assistance Patent and Companies Registration Organisation Poverty Reduction Strategy Private Sector Development Strategy Regional Trade Agreements South African Development Community Special and differential treatment Sanitary and Phytosanitary Standards South-South Special Safeguard Mechanism Standards and Trade Development Facility Technical Assistance and Capacity Building Trade Distorting Subsidies Transnational Companies Trade-Related Aspects of Intellectual Property Rights Time Release Study Uganda Private Sector Foundation vi
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UN UNDP US USA WCO WHO WIPO WTO ZAMITE
United Nations United Nations Development Programme United States United States of America World Customs Organisation World Health Organisation World Intellectual Property Organization World Trade Organization Zambia Trade and Investment Environment
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TABLE OF CONTENTS
DECLARATION ... ... ... ... ... ... ... ... ... i
DEDICATION ... ... ... ... ... ... ... ... ... ii
ACKNOWLEDGEMENTS ... ... ... ... ... ... ... ... iii
LIST OF ABBREVIATIONS AND ACRONYMS
... ... ... ... iv
TABLE OF CONTENTS ... ... ... ... ... ... ... ... viii
LIST OF FIGURES ... ... ... ... ... ... ... ... ... xi
ABSTRACT ... ... ... ... ... ... ... ... ... ... xii
CHAPTER ONE: RESEARCH DESIGN
1.0 Background ... .... ... ... ... ... ... ... ... 1
1.1 Statement of Problem ... .... ... ... ... ... ... ... 5
1.2 Objectives of the Study
... ... ... ... ... ... ... 6
1.3 Scope of Study
.... ... ... ... ... ... ... ... 6
1.4 Rationale of Study .... ... ... ... ... ... ... ... 6
1.5 Hypothesis ... .... ... ... ... ... ... ... ... 7
1.6 Theoretical Framework
... .... ... ... ... ... ... 7
1.7 Literature Review ... .... ... ... ... ... ... ... 11
1.8 Sources of Data and research methodology .... ... ... ... ... 16
1.9 Arrangement of Chapters ... .... ... ... ... ... ... 16
Endnotes ... .... ... ... ... ... ... ... ... 17
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CHAPTER TWO: OVERVIEW OF THE MDGs AND THE DDA
2.0 Introduction ... .... ... ... ... ... ... ... ... 19
2.1 The Millennium Development Goals (MDGs)... ... ... ... ... 19
2.1.1 What are the MDGs ... ... ... ... ... ... .. 19
2.1.2The Importance of the MDGs to Development
... ... ... 21
2.2 The Importance of MDG 8 to International Trade ... .... ... 22
2.3 The WTO and DDA
... .... ... ... ... ... 23
2.3.1 Before the Doha Ministerial Conference
... .... ... ... 25
2.3.2During the Doha Ministerial Conference
... .... ... 28
2.3.3 The DDA and its Implication on MDG 8
... .... ... 32
2.3.3.1 Agriculture ... ... ... ... ... ... ... 33
2.3.3.2 Non-Agricultural Market Access ... ... ... ... 35
2.3.3.3 Services ... ... ... ... ... ... .. 35
2.3.3.4 Trade Aspects of Intellectual Property Rights
... ... 36
2.4 Collapse of DDA ... .... ... ... ... ... ... ... 37
Endnotes ... .... ... ... ... ... ... ... ... 39
CHAPTER THREE: THE ROLE OF THE WTO IN PROMOTING GLOBAL PARTNERSHIP FOR DEVELOPMENT (MDG 8) IN AFRICA 3.0 Introduction ... .... ... ... ... ... ... ... ... 42
3.1 Trade and development (the participation of DCs in the Multilateral Trading System)... .... ... ... ... ... ... ... ... 42
3.1.1 Market Access
... .... ... ... ... ... ... 43
3.1.2 Negotiation Processes and Outcomes within the WTO ... .... 50
3.2 Aid for Trade Initiative (AfT)
... .... ... ... ... ... 51
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3.3 Access to Medicines
... .... ... ... ... ... ... 63
3.4 Implications of some WTO rules and Agreements to the realization of MDG 8 66
3.4.1 Dispute Settlement ... ... ... ... ... ... ... 68
3.4.2 Trade in Goods (GATT)
... ... ... ... ... ... 69
3.4.3 Agreement on Agriculture (AoA)
... ... ... ... ... 70
3.4.4 General Agreement on Trade in Services (GATS) ... ... ... 72
3.4.5 Trade Related Aspects of Intellectual Property Rights (TRIPS)
... 73
Endnotes ... .... ... ... ... ... ... ... ... 74
CHAPTER FOUR: SUMMARY OF FINDINGS, CONCLUSIONS AND RECOMMENDATIONS 4.0 Introduction ... .... ... ... ... ... ... ... ... 78 4.1 Summary of Findings ... .... ... ... ... ... ... ... 78 4.2 Conclusions ... .... ... ... ... ... ... ... ... 80 4.3 Recommendations ... .... ... ... ... ... ... ... 82 Bibliography ... ... ... ... ... ... ... ... ... 84
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Figure 1 Figure 2
LIST OF FIGURES
Tariffs and Non-Tariff Measures Affecting Exporters
... ... 47
Aid for Trade Disbursement ... ... ... ... ... ... 53
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University of Ghana http://ugspace.ug.edu.gh ABSTRACT Over the years, African countries have been reliant on international trade to solve developmental challenges. However, its benefits have largely been unattained due to the persistent imbalances within the global trading system. Meanwhile, the Millennium Declaration only reinforces the need for Africa to develop in order to attain other MDGs. Thus, the essence of MDG 8 is to ensure the development of LDCs and DCs. The trade targets within MDG 8 reiterate the importance of international trade in the development of states. Therefore, as the only multilateral trading regime, the contribution of the WTO in achieving MDG 8 cannot be displaced. This work is about the role of the WTO in promoting Global Partnership for Development (MDG 8) in Africa. The objectives of the study are to examine the implication of a successful conclusion of DDA to the development of Africa, to evaluate the specific contributions of the WTO to help realize MDG 8 in Africa and the effects of some WTO rules and agreements on the realization of MDG 8 in Africa. Using a qualitative approach, the research relied on secondary data such as official reports from the World Bank, IMF, WTO, UN and UNCTAD to gather, analyse and interpret data. From the study, although the contributions of the WTO have to an extent led to the realization of MDG 8 in Africa, some of its rules and agreements have also impeded the development of the region. The study also found out that if such issues were ironed out in the DDA, it would be a major step to achieving MDG 8. The study therefore recommends that the WTO revises its enforcement mechanisms to deter members from flouting rules and agreements governing the Multilateral Trading System (MTS). xii
University of Ghana http://ugspace.ug.edu.gh CHAPTER ONE RESEARCH DESIGN 1.0 Background Post 1945 international trade saw a new dimension, where states shifted from protectionism and beggar-thy-neighbour policies to more controlled trade policies, aimed at reducing tariffs. Being privy to how protectionism or trade barriers was a contributing factor to the economic depression of the 1930s, and its resulting military aggression, states saw the need for effective trade liberalization through a new trading system to ensure peace and economic stability.1 Thus, on 30th October, 1947, about 23 countries consented to a provisional trade agreement known as the General Agreement on Tariffs and Trade (GATT), after the creation of a United Nations (UN) specialized trade agency, the International Trade Organization (ITO) was rejected by the United States (US) and other countries.2 Among the principles the GATT operated on were Non-Discrimination, Reciprocity and Decision making procedures. Two rules which governed the Non-Discrimination principle was the Most Favoured Nation (MFN), which calls for an unconditional extension of advantages to like products of each contracting member; and the National Treatment (NT) which calls for equal treatment for both imports and domestic goods.3 The GATT also restricted the use of quota while encouraging members not to move beyond maximum tariff boundaries. In the broader sense, domestic trade regulations were not supposed to be prejudicial to commodities from other member states. 1
University of Ghana http://ugspace.ug.edu.gh Although the GATT, through a number of rounds, achieved its main objective (i.e. significant reduction in tariffs), it failed to address violations of its principles. Shulka, stressing these shortcomings of GATT states that, "it launched an impressive tariff reduction exercise, but also overlooked, connived at, and even presided over glaring breaches of its own basic tenets."4 As a result, the last round of the GATT (the Uruguay Round) was transformed from a mere agreement to an international organization- i.e. the World Trade Organization (WTO), to provide an enhanced dispute settlement system and also govern trade relations among its members as well as expanding its mandate to cover Intellectual Property Rights (IPRs).5 The WTO came into existence on 1st January, 1995. The aim of the WTO as stated in the Preamble to its establishment is to further ensure a free and open predictability of international trade with a view to raising standards of living, ensuring increased real incomes and increased exploitation of resources to expand international supply of goods and services.6 In brief, the WTO aims to ensure socio-Economic Development of its members and this was evident in the Doha Round which is also known as the Doha Development Agenda (DDA).7 It is based on its principles, as well as its development agenda, that the WTO is considered as one of the task forces in helping realize the Millennium Development Goals (MDGs) by developing a global partnership for development (MDG 8). Launched in September, 2000, a year before the launch of the DDA, the MDGs consisting of eight UN agreed goals aimed at addressing global development challenges. 2
University of Ghana http://ugspace.ug.edu.gh For the global community, to achieve these goals, there is the need to bridge the gap between the advanced countries and developing countries. Thus, the MDG 8- i.e. develop a global partnership for development- is regarded as the means to achieving such feat. The MDG 8 has six targets, including those covering trade, which when achieved could address development issues of developing countries as well as helping achieve other MDGs. The six targets of the MDG 8 are; to develop further an open, rule-based, predictable, non-discriminatory trading and financial systems (target A), address the special needs of least developed countries (target B), address the special needs of landlocked developing countries and small island developing States (target C), deal comprehensively with the debt problems of developing countries (target D), provide access to affordable essential drugs in developing countries (target E) and in cooperation with the private sector, make available benefits of new technologies, especially information and communications (target F).8 The MDG 8 further recognizes the positive effect trade liberalization has on socio-economic development. Thus, for trade to ensure real economic growth effectively, it needs to be open, rule-based, predictable and non-discriminatory, as recognized in the Target A of the MDG 8. Furthermore, MDG 8 also aims to use international trade to accelerate development processes in Developing countries and Least Developed Countries (LDCs).9 This corresponds to the principles of non-discrimination, free trade, and among others, on which the WTO operates to ensure a level playing field for all its members as well as ensuring the development of its members especially for the DCs and Least Developed Countries LDCs. 3
University of Ghana http://ugspace.ug.edu.gh Meanwhile, statistics show that international trade constitutes about 40% of the Gross Domestic Product (GDP) of African countries.10 However, the region's share in global trade has plummeted over the years due to several imbalances within the Multilateral Trading System as well as the region's failure to diversify its economy. Negative terms of trade, price volatility and persistent imbalances cost Africa about US$70 billion a year.11 The loss has plunged the region into economic depression and its resulting underdevelopment. According to a World Bank Report, "more than 40% of its 600 million people live below the internationally recognized poverty line of $1 a day, with incomes averaging just $0.65 a day in purchasing power parity terms."12 The level of underdevelopment in Africa has led to high rate of unemployment, hunger, food and human insecurity, lack of access to medicines and basic infrastructure, and violent political insurgencies.13 The United Nations Development Programme (UNDP) 2003 Human Development report makes it emphatically clear how ignoring the MDG 8 will cost poor countries in achieving the rest of the MDGs.14 This is because although international trade is not in itself an end to development, gains realised from it could be used in alleviating poverty and solving most global development challenges. Given the level of underdevelopment in Africa, the continent's reliance on international trade for growth, and with the highest number of member countries in the WTO, the role of the trading organization in ensuring the development of African countries and realization of the MDG 8 cannot be underestimated. 4
University of Ghana http://ugspace.ug.edu.gh 1.1 Statement of the Research Problem International Trade is regarded as one of the important engines for development.15 Over the years, many countries including China and Brazil have improved their economies through international trade. Thus, its importance to the development of Africa cannot be underestimated. International trade possesses great potentials in promoting economic growth and development. Despite this, Africa's share in global trade is comparably low. Statistics show that the region's share of global trade is less than 3%.16 This is mainly due to the various trade imbalances and trade distorting barriers inherent in the Multilateral Trading System (MTS). For instance, even though Agriculture covers about 60% of Africa's export earnings and also remains the income of more than half of the region's population, the region has suffered from persistent price falls with no guarantee to improve investment and also cover some production costs. Thus, expected outcomes from international trade for the development of Africa are barely gained. Furthermore, even though Africa has the highest number of members in the WTO, its participation as well as its concerns to ensure development are largely unaddressed. With the adoption of the MDGs and the global recognition of the importance of international trade, as enshrined in the targets of the MDG 8, the work of the WTO to ensure free and a balanced trade regime became more pronounced. The WTO launched the DDA to address all existing trade imbalances and also ensure African countries as well as other DCs and LDCs benefit from it in their development prospects. Despite such enormous programme, negotiations for the conclusion of the DDA have stalled. With Africa facing supply constraints and other trade facilitation challenges, questions have been 5
University of Ghana http://ugspace.ug.edu.gh raised on how the WTO can help achieve the MDG 8 through trade and further help DCs and LDCs benefit from trade. This study therefore seeks to assess and determine how the WTO is helping in the realization of the MDG 8 albeit the collapse of the DDA. 1.2 Objectives of the study To determine whether a successful conclusion of DDA would result in socio-economic development of Africa countries; To examine the contributions of WTO to the realization of MDG 8 in Africa; and To examine the implications of some WTO rules and agreements on the realization of the MDG 8 in Africa 1.3 Scope of the study The study covers trade issues regarding Trade-Related Aspects of Intellectual Property Rights (TRIPs), services, agriculture etc which have an impact on the development of Africa. It also covers issues from 2001 to date since it was the period when the DDA was launched to address interests of DCs and LDCs. 1.4 Rationale The importance of international trade to the economy of Africa cannot be underestimated. Given, the level of underdevelopment in the region largely due to negative terms of trade and the unsuccessful conclusion of DDA, it is important to identify how the WTO contributes to the development of Africa. 6
University of Ghana http://ugspace.ug.edu.gh 1.5 Hypothesis The WTO is playing a major role in achieving the MDG 8. 1.6 Theoretical Framework The study is situated within the framework of international regime theory. Several scholars have given definitions for regime but the most widely used is that provided by Stephen Krasner. Krasner defined regimes as "implicit or explicit principles, norms, rules and decision-making procedures around which actors' expectations converge in a given area of international relations."17 In other words, a regime is not political ruling of a state but how actors agree on how a specific area of international relations should be governed or conducted ­ i.e. the agreement by states on how international trade should be governed. They are rule-based institutions rather than temporal agreements. Regime is about cooperation with long term effects and interests. Regimes posit a medium through benefits could be realized through mutual cooperation. According to Hasenclever, Mayer and Rittberger, in explaining regimes, realists are interested in power relations, neoliberals focus on actor's interests while constructivists emphasize on knowledge dynamics, communication and identities.18 The neoliberals, however, explain that states are more concerned with absolute gains. Common interests prod states to cooperate and future retaliation prevents them from defecting. Cooperation, according to neoliberals presents better options for states although it is difficult to attain due to ever changing nature of the international system. Reliance and trust have 7
University of Ghana http://ugspace.ug.edu.gh constrained cooperation. In the Evolution of Cooperation, Axelrod asserts that "increased mutual transparency of behaviour and linking issues through time reduce such uncertainty and makes it easier for collaborative ventures."19 Thus they are able to eliminate all ineffective outcomes. Stein stresses on this by stating that there are two dilemmas states experience and they are dilemma of common interest and dilemma of common aversions in which actors achieve suboptimal outcomes. Such dilemma could be solved through cooperation. He uses the Prisoner's dilemma as one example of the Game theories to reinforce the issue of collective good whereby actors will perhaps be better off should they refuse to contribute to its provision. Such an anomaly makes the maintenance of regimes difficult.20 This is inherent in multilateral trade regimes- WTO, where developed countries would still be in better conditions, if they refuse to comply with the obligations to accelerate development in developing countries. Goldstein is therefore of the view that global free trade could be enhanced, if the problem of collective good is addressed and avoided.21 He emphasizes collaboration and coordination as solutions to the dilemmas; these would help shape behaviour of actors and allow expectations to converge. Defections in regimes are ways of forcing other actors to accept demands of the actor. Regimes make clear the roles of institutions which are to coordinate cooperation. Goldstein is of the view that institutionalized regimes provide checks and balances due to its permanent system. Neoliberals believe that the existence and maintenance of regimes will not be subjected to any possible demise even if interests which brought them together are no more. 8
University of Ghana http://ugspace.ug.edu.gh Stein holds the view that any cooperation that leaves states into a worse-off situation is not welcome, because they are more interested in relative gains.22 In a state of anarchy, actors are sovereign and autonomous. They are individualistic and thus wield considerable power and authority to make their own decisions to achieve their interests through cost-benefit analysis. The aim of the state is to dominate. Thus, for states to cooperate with other states, it means they know such agreement will help them achieve their interests. In other words, the distribution of capabilities affects the effectiveness of regime. In coordination and collaboration, Stein again argued through the structural lens that regimes are about international interaction thus national behaviour has no place in regimes and thereby suppressed. Regimes will rise, if states avoid independent decision making. However, where states could achieve their desired outcomes through individual efforts, then the issue of regimes becomes unimportant. Nevertheless, the rise of regimes would also be curtailed if some actors are satisfied and others are not. He likened regimes to a domestic society where individualism and predatory behaviours are not allowed.23 Other scholars, especially the cognitivists, consider the intersubjective aspects of regime formation. Interests of states according to them are not externally given but socially constructed to influence the international system and vice versa.24 They consider the influence of ideas on actors. Thus Oran Young sees regime as a social structure and not functions. To him regimes emphasize on activities which is outside domestic jurisdiction.25 They assert that the social structure constructs actor's identity by emphasizing what are socially acceptable norms and interests. This means that consistent behavioural patterns are the reasons why states cooperate. 9
University of Ghana http://ugspace.ug.edu.gh There the existence of a regime depends on such conventions even though there may be defections. According to Young, regimes are human artefacts based on behaviour of individuals.26 Like social institutions, they undergo significant alteration. Some regimes are characterized by agreement on major provision, explicit consent and formal expression of results. Young calls such regimes negotiated order where internal contradictions can cause regime failure or a change in the central element on which the regime was established.27 Given the definition by Krasner and the various arguments raised by the realists, neoliberals and the constructivists, the theory of international regimes gives a perfect understanding to the workings of the WTO. As a rule based institution, which facilitates free global trade, it is important to understand the reasons for membership and certain conduct by states. Again, it will help us understand why the WTO is failing in the facilitation of the development agenda in developing countries. Whether the affairs of the WTO are conducted by the superpowers within would well be understood in the light of the assumptions in explaining the International regime theory. The MDGs also have regime-related goals. With the aim of ensuring development in basic needs in developing countries, the members of the UN agreed to these goals and their respective targets with the aim of achieving development in developing countries. The MDGs serve as principles, rules or norms around which the expectations of member states of the UN in achieving development converge. 10
University of Ghana http://ugspace.ug.edu.gh 1.7 Literature Review The Global Partnership for Development (MDG 8) highlights the acceptance and agreement of member states of the United Nations that, for states to achieve the rest of the MDGs, there is the need to bridge the gap between the advanced countries and the DCs as well as LDCs. In other words, states have consented to the need to integrate developing countries into the world economy in order to enhance and improve their prospective development. Global international trade therefore remains one of the core prerequisites for development. Morton and Weston in their work Trading for Development: Developed Countries' Responsibilities under MDG 8 are assert that trade related target improves North-South relationship and at the same time holds governments accountable for their commitment to the global partnership.28 Although the WTO is working to promote global partnership for development, its rules drive developing countries into costs and losses. Khor, in analysing Problems of Implementation and Lack of Progress in Development Issues in WTO emphasized that many WTO agreements contain imbalances.29 These imbalances meant that DCs and LDCs undertake more obligations and yet benefits are not equally distributed. Das also argues that two sets of implementation problem exist in the WTO. They are the failure of developed countries to implement their obligations resulting in non-realization of anticipated benefits and the second is changes in domestic policies in order to fulfil the obligations of the Uruguay Round of Negotiations. 11
University of Ghana http://ugspace.ug.edu.gh For DCs and LDCs, Agriculture is probably the most important economic sector, through which development and poverty reduction could be attained. Agricultural goods of DCs and LDCs have suffered high tariffs, trade-distorting subsidies, and restrictive sanitary and phyto-sanitary measures in developed countries. For instance, Morton and Weston state the case in Ireland, where market access is constrained by cumbersome entry requirements.30 In his article on The Doha Round of Multilateral Trade Negotiations and the Developing Economies, Das Dipak emphasized that although WTO has encouraged market access to developed countries by developing countries, there are hidden elements in statistics provided. In his arguments, he agreed that exports in manufactured and agricultural goods of developing economies rose at similar pace during the 1990s. However, exports of agricultural goods between developing countries soared higher (9.5%-13.4%) while that of developed countries was stagnant (25.8%22%). In the other end, manufactured goods exports to industrial economies soared (15.2% to 21.1%).31 The statistics provide shows the extent at which developing countries still face problems to have access to markets of developed countries for their agricultural goods. Again, the statistics shows how international trade is one of south-south in nature rather than northsouth. Thus, market access for agricultural goods into developed economies is mostly unlikely. In examining how market access could improve economies of developing countries, Laborde argues that the expansion coverage of trade preferences could alone lead to an increment in the annual exports of developing economies to 10 billion USD.32 Nonetheless, market access barriers remain substantial and inherent in multilateral trading system. Furthermore, market access, domestic support, export competition and review of the Special and Differential Treatment (SDT) remain the biggest barriers in the WTO.33 12
University of Ghana http://ugspace.ug.edu.gh Lack of market access has become one of human rights issue in that such trade discrimination is regarded as an abuse of human rights (most importantly racial abuse). Studies suggest that human rights are embedded in development policies especially when such policies aim at advancing equitable economic growth and development. In reference to this, Fakuda-Parr in her work on Millennium Development Goal 8: Indicators for International Human Rights obligations emphasizes that the discriminatory barriers inherent in the multilateral trading system are affront and violations to human rights principles.34 Thus, lack of market access is not only associated to trade but also to the rights of human beings. To her, the inadequate participation of developing countries in international decision making resulting from democratic deficit in global governance, the lack of transparency and the weakness in bargaining power in WTO negotiations have led to trade rules favouring the interests of the advanced countries. These arguments raise an issue of lack of respect for developing countries and their commodities as a basis for the inaccessibility to markets of advanced countries. In similar vein, the Leprosy Mission Ireland MDG Report also states that the trade related target of the MDG 8 includes commitment to good governance, development as well as poverty reduction.35 Vandermoortele and Malhortra also reinforce the view that MDG 8 is a human development issue thus calling for greater flexibilities in agricultural development policies.36 Inferring from their article, trade imbalances coupled with development aid have curtailed the realization of other MDGs in Africa. Contrastingly, Soo-Ming Koo is of the view that trade and market oriented policies could translate into human development. In his The Millennium Development Goals: A Critical Discussion, he noted that markets distribute commodities not rights.37 In spite of the contrasting argument raised by Soo-Ming Koo, trade provides fundamental elements to the realization of 13
University of Ghana http://ugspace.ug.edu.gh human development. States generate revenue through trade, build on human capacity through trade and provide livelihood as well. In some cases such trade distortions help achieve some environmental objectives. Copeland and Taylor also argue from a different point that lack of market access for certain commodities is mainly for environmental protection.38 For example US import bans on tuna from Mexico is to protect dolphins and also import bans on shrimps from various countries to protect turtles. The laxity of WTO rules of leaving definition of environmental protection to states, therefore, favours developed countries. Another important problem facing DCs in the multilateral trading system is how to protect their peasant farmers from the highly subsidized imports from developed countries. For example in 2003/2004, Queen Elizabeth II received 1.31 million USD as farm payments while the Duke of Westminster, who owns about 55,000 hectares of farm estate received 480,000 USD as direct payments.39 The issue of subsidies to agricultural production in developed countries affects domestic producers in DCs and LDCs. A MDG Report by the Leprosy Mission Ireland, further suggests that such subsidies contributed to food crisis in 2007 and 2008.40 According to Khor, current talks on the subject of subsidies lack process and substance. In the issue of process, developing countries have been left out in negotiations on agriculture. The whole process is vested in few developed and emerging economies which includes Japan, United States of America (USA), European Union (EU), India, Brazil and Australia41. Developing countries have also called for the elimination of domestic subsidies. Talking about subsidies, Bhagirath Lal Das, a trade expert comments that " there is no reason for export subsidies to continue at all; hence the bulk of developed countries' subsidies, say 90%, should be eliminated at the end of the first year of the implementation period of the outcome of the negotiations.42" However the 14
University of Ghana http://ugspace.ug.edu.gh interest lies in the permitted levels and actual levels as well as the different boxes of subsidies. In the case of the latter, developed countries actually use certain means to move Trade Distorting Subsidies (TDS) into boxes of non- trade distorting subsidies which are affecting the small poorer farmers in developing countries.43 Phasing out export subsidies well before 2015 is a daunting task due to continuous grant of generous subsidies of over 300billion USD per year to their agricultural sector44. According to the Leprosy Ireland Mission Report, although subsidies and tariffs are prevalent in developed countries, the existence of Structural Adjustment Policies forced on developing countries by the World Bank and the International Monetary Fund (IMF) well before the establishment of WTO have curtailed them from realizing development finance.45 In addressing the weakness of the MDG 8, Morton and Weston are of the view that the importance of trade rules to allow developing countries policy flexibility to address their own needs and also opening up their markets was not addressed.46 Additionally, trade targeted actions are not specified in order to make major stakeholder be committed. However most of the issues are under negotiation in the current WTO round of negotiation.47 It is therefore important to note that DCs and LDCs would need greater assistance to boost their exports and also allow for improved market access. Mutasa, therefore, is of the view that effective market access opportunities for such countries could be of importance if they are assisted to produce goods of quality and higher value.48 This means that DCs and LDCs, amidst these trading concerns, lack the technical capacity to produce tradable goods. In talking about subsidies, the comparative advantage developing countries have in the production of agricultural goods is curtailed. 15
University of Ghana http://ugspace.ug.edu.gh The literature provides the imbalances inhibiting the realization of MDG 8 within the WTO. It does not, however, address the failure of DCs like Africa to take advantage of trade opportunities granted by WTO and the contributions of WTO to realizing MDG 8. 1.8 Sources of Data and Research Methodology This research was conducted using qualitative research approach. Secondary sources of data comprise of the various reports and articles of the WTO and its role in achieving the MDG 8, MDG reports as well as IMF and World Bank reports. The study employs document and content analysis as key instruments to analyse the information gathered. 1.9 Arrangement of Chapters The study is arranged into four chapters. Chapter one is the Research Design. It introduces the work by giving a background to the study, and the problem statement, objectives of the research, the hypothesis, rationale and scope of the research and literature review. Chapter one also provided the theoretical framework as well as methods and sources of data collection. Chapter two gives an overview of the MDGs, and the WTO. It also focuses the importance of the DDA to the achievement of the MDG 8 and development. Chapter three examines contributions of the WTO to the realization of MDG 8 in Africa and the implications of some WTO rules and agreements on the realization of MDG 8. Chapter four provides a summary of the findings, conclusions and recommendations. 16
University of Ghana http://ugspace.ug.edu.gh ENDNOTES 1 Ferguson, I. F., (2007). World Trade Organization: Background and Issues. A CRS Report for Congress. 2 The ITO was to address trade barriers and other issues indirectly related to trade, including employment, investment, restrictive business practices, and commodity agreements. The US President at the time failed to present it for congress approval. S.P. Shulka (2000). From GATT to WTO and Beyond. Helsinki : UNU/WIDER. p.1. 3 Ibid. 4 Ibid. 5 VanGrasstek, C. (2013). The History and Future of the World Trade Organization. Geneva: WTO., pp. 45-49. 6 See http://www.wto.org/english/res_e/booksp_e/gatt_ai_e/preamble_e.pdf., retrieved on 29th September, 2014. 7 The Doha Round is the 4th Ministerial Conference which also known as Doha Development Agenda (DDA). The DDA is to address the existing WTO challenges that curtails the development of its members especially the Developing and Least Developed countries. Townsend, I. (2006). The WTO Doha Development Round: where next for world trade? A Research Paper for the House of Commons. UK 8 The six targets of the MDG 8 are; to develop further an open, rule-based, predictable, non-discriminatory trading and financial systems (target A), address the special needs of least developed countries (target B), address the special needs of landlocked developing countries and small island developing States (target C), Deal comprehensively with the debt problems of developing countries (target D), provide access to affordable essential drugs in developing countries (target E) and In cooperation with the private sector, make available benefits of new technologies, especially information and communications (target F). See http://www.un.org/millenniumgoals/global.shtml., retrieved on 3rd October, 2014 9 Ibid. 10 AfDB/OECD. (2002). African Economic Outlook 2001/2002. AfDB. 11 The World Bank (2000). Can Africa Claim the 21st Century? New York: The International Bank for Reconstruction and Development / The World Bank. 12 Ibid. 13 Ibid. 14 UNDP (2003), Human Development Report 2003: Millennium Development Goals: A Compact among Nations to End Human Poverty, New York; Oxford University Press 15 Zedillo, E., Messerlin, P. & Nielson, H., (2005). Trade for Development: Achieving the Millennium Development Goals, London: Earthscan. 16 17 Krasner, S. D. (1982). "Structural Causes and Regime Consequences: Regimes as Intervening Variables". in S. D. Krasner (1983). International Regimes. Ithaca, NY: Cornell University Press 18 Hasenclever, A., Mayer, P. & Rittberger, V. (2000). Theories of International Regimes. Cambridge University Press. 19 Axelrod, R. (1984). "The Evolution of Cooperation". NY: BASIC BOOKS. In Hasenclever, A., Mayer, P. & Rittberger, V. (2000). Theories of International Regimes. Review of International Studies, Vol 26, No.1. Cambridge University Press. 20 Stein, A., (1983). "Collaboration and Coordination". In Krasner, S. D. (Ed) (1983). International Regimes. NY: Cornell University Press. 21 Golstein, J. S. (1994). International Relations. NY : Harper Collins College Publishers. 22 Stein, A. (1983). Collaboration and Coordination. In Krasner, S. D. (Ed) (1983). International Regimes. NY: Cornell University Press. 23 Ibid. 24 See www.beyondintractability.org/essays/international-regimes., retrieved on 18th July, 2014. 25 Young, O., (1983). "The Rise and Fall of International Regimes". In Krasner, S. D. (Ed) (1983). International Regimes. NY: Cornell University Press. 26 Ibid. 27 Ibid. 28 Morton, B. & Weston, A. (2005). Trading for Development: Developed Countries' Responsibilities Under MDG 8. Trocaire Development Review. Dublin., pp. 85-102. 29 30 See Morton, B. & Weston, A. (2005)., pp. 89-95. 17
University of Ghana http://ugspace.ug.edu.gh 31 Das, D. K., (2005). The Doha Round of Multilateral Trade Negotiations and the Developing Economies. The Estey Centre, Journal of International Law and Trade Policy Vol 6 No. 2. Saskatoon., pp. 117-118. 32 Laborde, D., (2008), "Looking for a Meaningful Duty Free Quota Free Market Access Initiative in the Doha Development Agenda. In Elborgh-Woytek, K., Gregory, R. &McDonald, b. (2010). Reaching the MDGs: An Action Plan for Trade. IMF Staff Position Note. Washington:IMF. 33 See www.ictsd.org/downloads/2009/03/bridges09-8.pdf., retrieved on 15th July, 2014. 34 Fakuda-Parr, S., (2006). Millennium Development Goal 8: Indicators for International Human Rights Obligations? Human Rights Quarterly; 28, 4 ;Proquest Political Science. The John Hopkins University Press. 35 The Leprosy Mission Ireland. (2010). The Millennium Development Goals (MDGs) Unrealistic And Unattainable Because MDG Implementation Policies Advance The Interests of the Rich World at the Expense of the Poor? www.tcd.ie/Economics/Development_Studies/PDF/MDGSeries/MDG 2010 Docs/Leprosy MDG report Aug09.pdf., retrieved on 12th June, 2014. 36 Vandemooortele, J. & Malhotra, K. (2005). "Is MDG 8 on track as a Global Deal for Human Development?" In Rhazaoui, A., Gregoire, L. & Mellali, S. (2005). Africa and the Millennium Development Goals. Paris: Economica. 37 Koo, Soo-Ming (2005). The Millennium Development Goals: A Critical Discussion. Trocaire Development Review 2005. Kildare: Genprint (Irl) Ltd. 38 Copeland, B. R. & Taylor, M. S. (2004). Trade, Growth and Environment. Journal of Economic Literature Vol. 42, No. 1. Princeton University Press. 39 Khor, M., (2005). "A Development Assessment of the Current WTO Negotiations". In Rajamoorthy, T., Hong, E. & Ka-Min, L.(Eds). (2006). Impasse in WTO's Doha Talks. Third World Resurgence, No. 192-193. Penang: Malaysia., pp.16-23. 40 The Leprosy Mission Ireland MDG Report 2010. 41 Khor, M., op. cit. 42 Das, B. L. (2006). The Current Negotiations in the WTO : Options, Opportunities and Risks for Developing countries. Penang : TWN. 43 All domestic support measures considered to distort production and trade (with some exceptions) fall into the amber box, which is defined in Article 6 of the Agriculture Agreement as all domestic supports. These include measures to support prices, or subsidies directly related to production quantities. Any support that would normally be in the amber box, is placed in the blue box if the support also requires farmers to limit production. he green box is defined in Annex 2 of the Agriculture Agreement. in order to qualify, green box subsidies must not distort trade, or at most cause minimal distortion. See Khor, M. (2005). "A Development Assessment of the Current WTO Negotiations". In Rajamoorthy, T., Hong, E. & Ka-Min, L.(Eds). (2006). 44 Das, B. L., (2005). "The WTO: what next?" In Rajamoorthy, T., Hong, E. & Ka-Min, L.(Eds). (2006). Impasse in WTO's Doha Talks. Third World Resurgence, No. 192-193. Penang: Malaysia. 45 See The Leprosy Mission Ireland MDG Report 2010. 46 See Morton, B. & Weston, A. (2005). 47 www.ictsd.org/downloads/2009/03/bridges09-8.pdf 48 Mutasa, C., (2005). The Politics of the Millennium Development Goals in Africa: Is Global Partnership Really Working? Sustainable Development Law and Policy,Vol.6, No.1. digitalcommons.wcl. american.edu/cgi/viewcontent.cgi., retrieved on 10th March, 2014. 18
University of Ghana http://ugspace.ug.edu.gh CHAPTER TWO OVERVIEW OF THE MILLENNIUM DEVELOPMENT GOALS (MDGS) AND THE DOHA DEVELOPMENT AGENDA (DDA) 2.0 Introduction This chapter gives an overview of the MDGs, which sets the tone for a detailed review of the MDG 8 in relation to development in Africa. The chapter also discusses the DDA, which once concluded, will be vital in the achievement of the MDG 8. 2.1 The MDGs 2.1.1 What are the MDGs? The need for economic growth and development is globally accepted and therefore calls for global commitments for all countries. Thus, in the year 2000, the UN New York Summit endorsed the Millennium Declaration which led to the adoption of eight MDGs to be met by nations by 2015. The exception was MDG 8, which has no deadline. This provided a renewed commitment by the global community to the development of DCs and LDCs, especially in Africa. In highlighting the commitments of the global community, Das states that "the global community appreciates the moral imperative and development rationale of achieving the MDGs, particularly the first one that aims at reducing income poverty".1 The UN defines the time-bound MDGs as economic, social, and environmental development goals which seek to address the challenges of the global populace.2 In other words, they are human development specific goals which draw inference from the various global socio-economic development challenges, especially those faced by DCs and LDCs, such as food security, water, 19
University of Ghana http://ugspace.ug.edu.gh sanitation, poverty, economic crisis and climate. The MDGs are basically about welfare of individuals within a state. The International Monetary Fund (IMF) therefore defines the MDGs as "a set of development targets agreed by the international community, which centre on halving poverty and improving the welfare of the world's poorest by 2015."3 The uniqueness of these goals is the willingness and commitment of member states to uphold and promote the respect for human rights, preserving human dignity, promote equality and ensuring development in developing countries.4 States, thus, agreed to eliminate all forms of discrimination, social inequality and improve livelihoods. Each MDG has a set of targets and indicators which serve as benchmarks to monitor realization. The MDGs are related and they co-exist, in that, the realization of one of the goals has a spill over effect on the others. For instance, the realization of the development of a sustainable environment will reduce water-borne and air-borne diseases. To achieve these goals, there was the need to establish greater international coordination and cooperation among three sets of actors: the governments of DCs and LDCs on issues of health, education, labour, environment, and social welfare; the governments of industrialized countries on issues of trade, finance, and development cooperation; and the major international institutions.5 This is because although greater action to the achievement of the MDGs will be on DCs and LDCs, the assistance of advanced countries and other international institutions is very essential. This is particularly so in Africa which has majority of low-income countries. 20
University of Ghana http://ugspace.ug.edu.gh 2.1.2 The Importance of the MDGs to Development The MDGs are detailed, exact, time-bound, and covers socio-economic challenges facing the global community. They focus on relevant aspects of development and how they could be achieved through a partnership between the advanced countries and the DCs as well as LDCs. The MDGs are first and foremost, seen as a means to achieving human development. The 2005 Human Development Report (HDR) reiterates the role of MDGs in development by stating that "there is more to human development than the MDGs. But the goals provide a crucial benchmark for measuring progress towards the creation of a new, more just, less impoverished and less insecure world order."6 The MDGs are therefore a two-fold development objective; they serve as benchmarks and also as end in itself. Another importance of the MDGs worthy of noting is that, they also ensure global security not through the lens of chemical and atomic weaponry but rather through basic human needs such as food, education, health and environmental protection. Recent instabilities and conflicts in Africa are believed to be as result of underdevelopment and neglect by governments to address various concerns of citizens.7 Thus, the MDGs provide a form of international commitment by all governments to attend to the needs of their citizens in order to improve satisfaction and thereby eliminating barriers to the realization of MDGs.8 Finally, the MDGs provide a form of commitment by encouraging advanced countries and international institutions to address the needs of DCs and LDCs. This is enshrined in MDG 8, which emphasizes the need to help developing and least developed countries in their development prospects through trade, financial aid, technology and investment.9 This is not to 21
University of Ghana http://ugspace.ug.edu.gh say that, poorer countries do not have stakes in their own development. On the contrary, the need to incorporate these goals into their respective national policies is relevant. The MDGs therefore spell out the necessity of cooperation and action 2.2 The Importance of MDG 8 to International Trade and its intended benefits to Africa Trade is regarded as potent precondition to development and poverty reduction in Africa.10 Thus, ensuring trade liberalization, creating a fair rule based Multilateral Trading System (MTS), and ensuring a level playing field devoid of any trade distorting barriers as enshrined in the targets of the MDG 811, signify the importance of international trade in development. The MDGs are basically human development as well socio-economic development goals since they seek to address basic human needs. Given the importance of trade to development, the MDG 8 reiterates the need for trade rules to shift its concern from mere trade liberalization to enabling a policy space for human development.12 Thus, multilateral trade rules need to seek appropriate balance with national practices in order to benefit all involved. In order words, the MDG 8 calls for co-existence between multilateral rules and national rules to LDCs and DCs reap the essential benefits for their development prospect. Trade liberalization does not always impact positively on development. However, factors such as expanding markets, ensuring fair trading competition, provision of technical assistance, exposure to new technologies, access to medicines and increase in aggregate production can promote economic growth.13 An increase in production will mean an increase in jobs and an increase in export is likely to increase income. This will further improve rural livelihoods. According to the 22
University of Ghana http://ugspace.ug.edu.gh 2003 UNDP Publication on trade, regions that have developed over the past twenty years have had the highest number of exports.14 This is because, jobs would be created as production increases, increased incomes would be realized as export increases, and rural livelihoods would also improve. The importance of the MDG 8 in relation to international trade therefore cannot be underestimated. Development is not only about raising levels of incomes. Where individuals within a country are deprived of quality health services and other personal securities, such a country is underdeveloped.15 Thus, the importance of the MDG 8 is to use international trade to accelerate access to essential medicines into DCs and LDCs in order to improve on the welfare of individuals. Over the years, the story of Africa in global trade has been lost of potential earnings and its resultant poor economic performance and poor livelihood among its citizens. The region only contributes about 2.8% of world's exports.16 This is largely due to unfair international trade rules, lack of market access, trade distorting subsidies and imbalances in international trade agreements.17 Thus, a successful realization of the MDG 8 would not only increase income levels in Africa through trade but will also create employment opportunities. It would also ensure access to quality and affordable medicines to improve living conditions in the region. 2.3 The WTO and DDA The Marrakesh Agreement establishing the WTO defines the need for immense and assertive efforts to ensure members, especially DCs and LDCs, benefits from the growth of increased 23
University of Ghana http://ugspace.ug.edu.gh international trade. The Preamble to the Marrakesh Agreement calls for the improvement of living standards and protecting the environment in order to promote equity, non-discrimination and the right to development as well as to assess whether the international trading system like the WTO is equitable, rule-based, predictable and non-discriminatory.18 In relation to the above, the work of the WTO, including its rules or trade agreements must be geared towards the development of its members, especially LDCs and DCs in Africa. This could reflect in the living conditions of their citizens as well. Over the years, the WTO has expanded its scope to cover other issues like services, investment and Intellectual Property Rights (IPRs), agriculture, and dispute settlement which touch on some aspects of development (i.e. human development).19 These areas address issues on food security, public health, income, revenue, employment as well as access to technology. In the case of settlement of disputes, the WTO has made the dispute settlement mechanism system time-bound, consistent and more binding on all members. Any member found guilty of acting contrary to the rules and agreements of the MTS may be given a period of time to make implementation proposed by the panel by withdrawing, altering, changing or replacing the very particular inconsistent measure.20 Again where the member fails to make such implementation after the period given, it must give compensation or face retaliatory measures. One important workings of the WTO recently has been its efforts to ensure a successful conclusion of the Doha Development Agenda (DDA). Some agreements of the DDA embody the desire of the WTO to ensure the development of its members especially DCs and LDCs. Among 24
University of Ghana http://ugspace.ug.edu.gh some of the agreements are the issues on agricultural subsidies, Intellectual Property Rights (IPRs) and public health and liberalizing trade in services. The Doha Round of Negotiations is regarded as a development round by the WTO. The Doha Round of Negotiations was launched in November, 2001 during the fourth (4th) Ministerial Conference in Doha, Qatar. This round of negotiations, also known as the Doha Development Agenda (DDA), aims at addressing the imbalances within the multilateral trading rules while among other things, providing DCs and LDCs with improved conditions to make them better off through trade liberalization.21 This is to ensure that improved trade conditions or rules will help accelerate development in member states, especially DCs and LDCs in Africa. The programme thus incorporates development concerns into the framework of the MTS with the aim of improving the socio-economic conditions in such countries. The DDA is seen as the fulcrum on which the MDGs could be achieved.22 This is because the negotiations seeks to address needs and interests of DCs and LDCs with regards to human, economic and infrastructural development. Furthermore, the DDA allows for cooperation to address global economic challenges through international trade which is a key element of the MDG 8.23 2.3.1 Before the Doha Ministerial Conference Prior to the Doha Ministerial Conference, the WTO was already carrying out negotiations on Trade in Agriculture and services. While some developed countries were interested in expanding the scope of the WTO, DCs and LDCs were more interested in addressing the existing issues and 25
University of Ghana http://ugspace.ug.edu.gh binding agreements, such as the Agreement on Agriculture (AoA), the General Agreement on Trade in Services (GATS) and the Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS). DCs and LDCs were calling for increased integration into the global economic system.24 DCs and LDCs had raised various arguments in a proposal known as the Implementation issues.25 The proposal mainly covered the flaws and imbalances of the various agreements during the Uruguay Round. These imbalances allowed DCs and LDCs to undertake more obligations with limited and unequal benefits. Other issues highlighted by DCs for redress included transparency, democracy, and participation in the decision making processes. This is because the MTS had earlier failed to incorporate the interests of DCs and LDCs in the draft for the Ministerial Declaration of the Singapore Issues. As a result, DCs and LDCs also kicked against the inclusion of new issues. The Singapore issues were issues covering investment, competition policy, transparency in government procurement, and trade facilitation. These issues were also regarded as important to addressing the socio-economic challenges of DCs and LDCs.26 These issues were aimed at building the trade capacities of DCs and LDCs in order to help them compete in the global market. Furthermore, the welfare gains projected for DCs and LDCs on a successful conclusion of the Uruguay Round was not realized. This was because the actual situations in international trade were not a true reflection of the agreements made in the Uruguay Round. Trade Distorting Subsidies (TDS) and persistent Non-Tariff Barriers (NTBs) as well as lack of policy space meant that the DCs and LDCs, undertook greater concessions than the advanced countries. Thus, they 26
University of Ghana http://ugspace.ug.edu.gh could not benefit from trade liberalization. DCs and LDCs therefore saw the need for the WTO to address these issues before the inclusion of new issues.27 In brief, DCs and LDCs were initially against a new round of negotiation since there were important existing issues with regards to the shortcomings of the Uruguay Round and its perceived outcomes. However, they agreed to a new round because they saw it as the only way to rebalance the outcomes of the Uruguay Round. This is due to the fact that market access for agriculture and persons as well as services, subsidy reform, effectiveness of Special and Differential Treatment (SDT) and revising existing WTO rules could not be achieved without a new round.28 Additionally, issues concerning limited market access and unfavourable multilateral trade terms also increased the desires of member states to establish Bilateral Trade Agreements (BTAs) or Regional Trade Agreements (RTAs). These mutual cooperative arrangements were regarded as the easiest way of achieving greater deal of trade liberalization. However, it also meant that members, who were not part of such regional or bilateral arrangements, were unlikely to benefit from free trade.29 This is because such members would not enjoy the terms of trade, governing those agreements. Thus, the issue of BTAs and RTAs were likely to harbour elements of discrimination. This was in sharp contrast to the principle of non-discrimination in the WTO. Thus, there was the need for a new round of negotiations to address the existing trade imbalances. 27
University of Ghana http://ugspace.ug.edu.gh Another factor which influenced the Doha negotiations was the weakened global economy, which was created by fall in trade flow, as well as terrorism-related issues with specific reference to September, 11 attack on the World Trade Centre. According to the WTO, the year 2001 saw the world record its lowest growth output in more than two decades.30 Thus, member states of the WTO saw the need for a deep political unity to solving terrorism threats through trade. Trade is therefore an essential tool in building relationships. 2.3.2 During the Doha Ministerial Conference The Doha Ministerial Conference was fraught with many challenges ranging from presentation of drafts and extension of the ministerial meeting. This created ambiguity in accepting the text as a basis for negotiation. Thus, the whole negotiation process as Khor puts it was purely discriminatory and lacked any commitment, especially on the part of developed countries to ensure the socio-economic development of DCs and LDCs.31 Despite these challenges, some documents were adopted to guide future actions within the WTO and they are the Ministerial Declaration, the Declaration on the TRIPS Agreement and Public Health as well as a document on Implementation-Related issues.32 These documents together form the Doha Work Programme (DWP). The DWP highlights on proposals for new disciplines in trade. These include the interpretation of the TRIPS Agreement as well as revisiting some WTO rules and other trade related areas of interest to DCs and LDCs. The DDA also covers issues regarding market access, enforcement actions, the Special and Differential Treatment (SDT) for DCs as well as technical assistance and capacity building. The 28
University of Ghana http://ugspace.ug.edu.gh issues related to market access have more to do with distorting subsidies in agriculture, antidumping and safeguards which are normally applied under the guise of environmental protection, as well as the reducing trade restrictions on services.33 With regard to the issue of Agriculture in the DDA, three areas of concern were highlighted by DCs and LDCs in the negotiation. They are domestic support, market access and export subsidies. DCs and LDCs still maintain that significant reduction of all sorts of trade distortion subsidies and practices would increase its revenue base thereby increasing its prospects of development.34 For DCs and LDCs, there is the need for a significant reduction of tariff peaks and the elimination of tariff escalation, specifically for their agricultural exports. Some DCs and LDCs pushed for the use of the "Swiss Formula"35 used by developed countries during the Tokyo Round in order to ensure immense cuts on tariffs which are higher. Within the context of SDT, DCs are of the view that the DDA should allow longer periods for implementation of WTO policies while LDCs call for a complete exemption in some of the provisions of various agreements. Longer periods of implementation would allow DCs address any conflict that exists between its own respective national policies and that of the multilateral organization. The DCs and LDCs have stressed that revising the AoA to limit the Aggregate Measure of Support would be an important step to addressing the development concerns of the DDA.36 Such support for farmers in the advanced helps them to produce on a large scale at a low cost, creating avenue for dumping practices. This affects producers from DCs and LDCs, who produce at a high cost and on relatively small scale. The Doha Declaration therefore emphasized the need to 29
University of Ghana http://ugspace.ug.edu.gh phase out export subsidies on agricultural products while proper safeguarding measures should aim at eliminating export dumping practices. The negotiation on Services in the DDA was seen as a backdrop by developed countries in order to agree on the concessions on Agriculture raised by the DCs and LDCs. However, like other areas of negotiation, the General Agreement on Trade in Services (GATS) also contains flaws. DCs have not benefited from its liberalization due to lack of infrastructure in the service sector. In addition, the interest of these countries in the area of export of natural persons has generally been ignored in favour of financial services and telecommunication, which are essentially beneficial to advanced countries.37 Liberalization of services has been on unilateral basis since states see it as a means to boost their own economic interest, thus making it difficult to enshrine them in the GATS commitments. In this regard, the DDA is tasked to address the inequality in the spread and supply of all services which has been created as a result of the unilateral liberalization by member states.38 Other issues addressed in the DDA include market access for all services, including the movement of natural persons and also encouraging the need for technical and financial assistance -i.e. Foreign Direct Investment (FDI) to DCs and LDCs in the service sector. This would help facilitate foreign competition in services to allow DCs and LDCs realize enough revenue.39 The aim of the DDA in the negotiation of Non-Agricultural Market Access (NAMA) is to achieve a significant reduction of tariffs on industrial goods to promote market access. Such reductions of tariffs covered products of export interests to DCs and LDCs as stated in the Doha 30
University of Ghana http://ugspace.ug.edu.gh Declaration. The DDA is also mandated to take cognizance of the special needs of DCs and LDCs while ensuring reciprocity. The interest of DCs and LDCs in the NAMA negotiation was to increase its export earnings through a significant tariff reduction (i.e. market access). Meanwhile, developed countries also wanted to see a significant reduction of industrial tariffs on the part of DCs. However such situation will only create unemployment as local firms could be shut down. Thus, there is the need for increased Generalized System of Preferences (GSP) to help DCs and LDCs make enough gains in the export of industrial products.40 Another bone of contention which existed through the DDA is the Agreement and concessions on TRIPS. The TRIPS Agreement aims for creativity, innovation, and technology transfer through the protection of Intellectual Property Rights (IPRs) as enshrined in Article 7 of the Agreement. Thus, developed countries needed to speed up the dissemination of technology to DCs and LDCs. The agreement also pays attention to the technological needs of the LDCs and DCs by helping them create a strong technological base. This would help such countries to improve on their supply constraints and also diversify their economies. However, DCs and LDCs, the current TRIPS Agreement only creates the promotion of monopolistic and anti-competitive practices and structures.41 This is because it limits access to medicines to cater for the health needs of citizens in DCs and LDCs. The provisions within the TRIPS Agreement that could benefit DCs and LDCs such as technology transfer and technical cooperation are not properly documented to ensure enforcement. 31
University of Ghana http://ugspace.ug.edu.gh The Doha Declaration gives DCs and LDCs the right to interpret the TRIPS agreement from a public health point of view and also grants these countries flexibilities to issue compulsory licenses. It however does not give any solutions for countries without generic drug manufacturing capacity.42 Meanwhile, most DCs and LDCs are found in this situation where they lack capacities to manufacture generic drugs. This has therefore informed the Intellectual Property regime to promote monopolies and difficulties in accessing technology by imitators, who are mostly DCs and LDCs.43 These issues prompted DCs and LDCs for improved revision and greater concessions with regards to the TRIPS Agreement during the Doha Round of Negotiation. 2.3.3 The DDA and Its Implication on the MDG 8 It is important to note that the issues raised in the Doha Round have significant effects on human development in terms of income generation, employment, public health, gender outcomes, access to technology and equity. These form the core of the MDGs. Thus, in looking at the relationship that exists between international trade and development, the DDA is considered as a very important factor to achieve the MDG 8 and the other MDGs. The 2005 UNDP HDR asserts that, although good trade rules are not ends in themselves in achieving development, ignoring them could also imply serious economic development consequences.44 Thus it is essential to address all unfair procedures and trade distorting elements as well revising all agreements that hinder policy space within the trade regime (i.e. the WTO). Some of the issues that require redress and are of importance to this research are the following: 32
University of Ghana http://ugspace.ug.edu.gh 2.3.3.1 Agriculture Agriculture is of particular interest to DCs and LDCs and remains the mainstay for these countries, especially African countries. Governments, rural producers and other agriculture stakeholders generate revenue, incomes, employment as well as rural development and livelihood from agriculture. For instance, Agriculture accounts for one-third of the Gross Domestic Product (GDP) of some African countries like Tanzania, Kenya and Mozambique.45 However, the complexities, regarding trade in Agriculture have hampered development of these countries to some extent. The complexities are as a result of higher tariffs and increased competition from producers who receive higher domestic support from their governments. This is evident in developed countries. Given the reliance on Agriculture, particularly by DCs and LDCs within the WTO, it is very important to allow such countries greater flexibilities in their Agricultural Development Policies (ADP) in order to help in their development prospects. Again, the development of DCs and LDCs with regards to Agriculture is also within the scope of market access, export subsidies, and domestic support. With the reduction of tariffs and the expansion of quota to DCs and LDCs, increased market access could be realized. This would be beneficial to such countries within the WTO especially since increased exports would yield increased revenue. However, such market access would largely benefit member states that have liberalized and revised domestic policies and also placed stringent measures to realize increased growth. 33
University of Ghana http://ugspace.ug.edu.gh Significant reduction of tariffs would increase development of rural livelihood as well as enhancing increased food security. However, tariff reduction should not be rigidly carried out in all cases since increased tariffs would largely compensate for a fall in import prices as well as increase in the volume of imports. However this is normally done for specific and special products under the Special Safeguard Mechanism (SSM). Meanwhile, the bone of contention for most DCs and LDCs is the fear of complete erosion of preferences should there be a significant reduction of tariffs. Preferential access is also essential in the development of DCs and LDCs as they acquire enough market access to realize foreign exchange. Where there are flexibilities concerning tariff reductions, member states would discriminate on goods from other member states, a situation which may lead to decreased welfare gains as well as hampering development. A food security proposal submitted by a group of thirty-three (33) developing countries (G-33) indicated that the amendment of the AoA to address trade distorting support would improve the livelihoods of farmers who produce on a small-scale in DCs and LDCs in terms of food security as well as income maximization.46 Notwithstanding these advantages, the DDA could also lead to a complete erosion of all trade preferences, should it commit to a significant reduction of tariffs and subsidies on a MFN basis.47 This could be quite problematic for DCs and LDCs as other competitors acquire access to their domestic markets. This would likely affect welfare gains. According to the Overseas Development Institute (ODI), such situation would reduce welfare gains of Uganda by 1.2%. 34
University of Ghana http://ugspace.ug.edu.gh
2.3.3.2
Non-Agricultural Market Access (NAMA)
A significant reduction of tariffs on non-agricultural goods especially manufactured goods would
increase global trade by about $380 billion, a situation which would likely trickle down to DCs
and LDCs to meet their development challenges.48 Such reduction in tariff especially on clothing
and textile would be complementary to trade distortions in Agriculture. This is would further
grant DCs and LDCs comparative advantage in other Agriculture alternatives in order to increase
its economic growth and development.
In view of this, there is the need for increased South-South (SS) and North-South (NS) trade in order to realize the full potentials of economic growth and development.49
2.3.3.3
Services
The Liberalization of services to include every aspect of the sectorial coverage will enable DCs
and LDCs to exploit new technologies, especially in telecommunication.50 For instance, although
African economies are full of small-scale enterprises, competition in services especially
telecommunication would likely contribute to a widespread use of cellular phones. Services form
important aspect of development in terms of growth and efficiency of the economy and human
development through the provision of basic services like water, health and improved sanitation.
Gains from increased exports and imports could be realized from the provision of transport,
logistics and other distribution services. Thus, services are fundamental to achieving the MDG 8
and the other MDGs.51
35
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2.3.3.4
Trade Related Aspects of Intellectual Property Rights (TRIPS)
Important provisions within the agreement rather impinge on the development of DCs and LDCs.
Those provisions have rather helped developed countries in monopolizing technology to the
detriment of LDCs and DCs.
From human development point of view, the TRIPS Agreement would only have serious implications on Public Health, technology and knowledge as well as biological resources especially in DCs and LDCs.52 In as much as the TRIPS agreement enhances human capital development in some circumstances, the monopoly created has resulted in significant high prices of essential medicines and has also limited access to new technologies in DCs and LDCs. For instance, with reference to HIV/AIDS, victims in DCs and LDCs would find it difficult to afford treatment, given that it cost almost twelve thousand US dollars ($12,000) for HIV/AIDS patients in such countries to treat themselves.53
Furthermore, implementing the Intellectual Property Rights (IPR) legislation similar to the standards of advance countries would rather impinge on the technological development of DCs and LDCs. Given the inequality in technological capacity, the issue of "one-size fits all" would only benefit Transnational Corporations (TNCs) from developed countries since all the profits and royalties from ownership of IPRs would be directed to them. These TNCs also control research and development.54
According to the World Bank, a successful Doha Negotiation could see global gains of $250 billion to $600 billion per year while about poverty in Sub-Saharan Africa would be reduced by 36
University of Ghana http://ugspace.ug.edu.gh almost $60 million dollars per year. Critics however believe that, the extent of gains from the DDA would only be determined by the scope of the reform in the final draft.55 Such argument is however, not exhaustive. This is because greater commitment from advanced countries will play a crucial role should the scope of the reform cover all outstanding issues raised by DCs and LDCs. This would rather help African countries realize their respective revenue to tackle poverty. 2.4 Collapse of DDA The DDA has been stalled for some years after its launch despite some benefits its conclusion can bring such as increase to market access and access to affordable medicine. The collapse of the 2003 Cancun Ministerial Conference which was supposed to set the framework for the implementation DDA is one of the major reasons for the failure of the DDA. Also, the DDA collapsed as a result of lack of commitment from developed countries. Through the revision of agricultural protection policies, developed countries have left their markets closed. For example, cotton-producing African countries like Burkina Faso, Chad and Mali suffered from the cotton subsidies granted producers from the United States.56 Until this point, the DDA was stagnant. However, the July, 2004 Package was initiated to work on the modalities, the principles for both current and future negotiations.57 The package included an adopted system to cutting down domestic support and tariffs as well as granting DCs and LDCs flexibilities and longer implementation periods. Due to the failure in addressing the differences in defining such modalities, the July 2004 package was extended to the 2005 Hong Kong Ministerial Conference. 37
University of Ghana http://ugspace.ug.edu.gh The Hong Kong Ministerial Declaration made significant impact to achieving a successful conclusion of the DDA by setting deadlines for eliminating agricultural and cotton export subsidies in 2013 and 2006 respectively. It also ensured commitments to development in DCs and LDCs. However, it failed to address the differences on the framework for agricultural and NAMA sectors.58 This is because while DCs and LDCs needed greater concessions from advanced countries on already existing agreements, the advanced countries were interested in adding other areas of their interest to the already existing ones. The 2008 Geneva conference which was supposed to resurrect the stalled DDA negotiations also became stagnant with limited commitments both from emerging DCs like China and Brazil and advanced economies. In sum, the lack of consensus in agreeing on modalities, lack of commitment as well as the inclusion of new trade issues, were the factors that led to the collapse of the DDA.59 In relation to the discussed issues, it is essential to address the various loopholes within the DDA. This is because estimated gains of a successful conclusion of the DDA would represent one-quarter of the world's GDP.60 Thus, in the midst of the shortcomings, a successful conclusion of the DDA would be a major step to the realization of the MDG 8. 38
University of Ghana http://ugspace.ug.edu.gh ENDNOTES 1 Das, D. K., (2006). Development, Developing Economies and the Doha Round of Multilateral Trade Negotiations. CSGR Working Paper 207/06. Ontario. 2 United Nations Economic Commission for Europe. (2006). The Millennium Development Goals. The Way Ahead: A Pan-European Perspective. New York and Geneva : UN 3 See https://www.imf.org/external/np/exr/facts/mdg.htm., retrieved on 22nd September, 2014 4 United Nations. (2002).United Nations Millennium Declaration, Resolution adopted by the General Assembly, New York: United Nations. 5 AfDB/World Bank. (2002). Achieving the Millennium Development Goals in Africa. Progress, Prospects, and Policy Implications. Global Poverty Report 2002. AfDB. 6 UNDP. (2005). International Cooperation at Crossroads: Aid, Trade and Security in an Unequal World. Human Development Report 2005. New York: UNDP. 7 The World Bank (2000). Can Africa Claim the 21st Century? New York: The International Bank for Reconstruction and Development / The World Bank. 8 Ibid. 9 UN Millennium Project. (2005). Investing in Development: A Practical Plan to Achieve the Millennium Development Goals. New York: UN Millennium Project. 10 See http://www.undg.org/archive_docs/4532., retrieved on 14th August, 2014 11 The targets of MDG 8 to develop further an open, rule-based, predictable, non-discriminatory trading and financial systems (target A), address the special needs of least developed countries (target B), address the special needs of landlocked developing countries and small island developing States (target C), Deal comprehensively with the debt problems of developing countries (target D), provide access to affordable essential drugs in developing countries (target E) and In cooperation with the private sector, make available benefits of new technologies, especially information and communications (target F). See http://www.un.org/millenniumgoals/global.shtml 12 Human development is a process of expanding people's choices, allowing them to live secure lives with full freedoms and rights. Human development requires equitable, sustainable economic growth, creating jobs and raising incomes. Vandemoortele, J., Malhotra, K., & Lim, J.A. (2003). Is MDG 8 on track as a global deal for human development? New York: UN Publishing.,p.6 13 UNDP. (2003). Making Trade work for People. London: Earthscan Publications Ltd. 14 Ibid. 15 Ibid. 16 UNCTAD (2013). Intra African Trade: Unlocking Private Sector Dynamism. Economic Development in Africa Report 2013. New York: UN Publication. 17 World Bank (2002). Globalization, Growth, and Poverty: Building an Inclusive World Economy". Washington DC: WB. 18 In the preamble of the Marrakesh Agreement, the Members agreed that "their relations in the field of trade and economic endeavour should be conducted with a view to raising standards of living, [and] ensuring full employment ... while allowing for the optimal use of the world's resources in accordance with the objective of sustainable development, seeking both to protect and preserve the environment and to enhance the means for doing so in a manner consistent with their respective needs and concerns at different levels of economic development" See WTO Submission in follow up to UNHRC resolution 15/25 "The Right to Development" at http://www.ohchr.org/Documents/Issues/Development/Session12/WTO.pdf., 19 UNDP. (2003), op. cit. 20 Shedd, D. T., Murrill, B. J. & Smith, J. M., (2012). Dispute Settlement in the World Trade Organization (WTO): An Overview. Congressional Research Service 21 Das, D. K., op. cit. 22 UNDP (2005). International Cooperation at a Crossroads: Aid Trade and Security in an unequal world 2005 Human Development Report. New York : Hoechstetter Printing Co. 23 Mehter, P. & Chatterjee, B. (2011). Doha Development Round. Prospective outcomes and African Perspective. Global Poverty Summit Johannesburg., p.1 24 Bo, S., (1998).International Economics 2nd ed., Houndmills: Macmillan. 25 Das, B. L. (2003). The WTO and The Multilateral Trading System: Present, past and future. Penang: TWN. 39
University of Ghana http://ugspace.ug.edu.gh 26 Khor, M., (ed). (2001). The Multilateral Trading System. A development Perspective. A paper for UNDP. Penang: TWN. 27 See Stiglitz, J.E. & Charlton, A. (2004). A Development of Round of Trade Negotiation at https://www0.gsb.columbia.edu/faculty/jstiglitz/download/2004_Charlton_Stiglitz.pdf. 28 Zedillo, E., Messerlin, P. & Nielson, H. (2005). Trade for Development: Achieving the Millennium Development Goals. London: Earthscan. 29 Cooper, W. H., (2014). Free Trade Agreements: Impact on US Trade and Implications for US Trade Policy. Washington DC : Congressional Research Service. 30 World Trade Organization (WTO), Annual Report 2002., p. 10. 31 Khor, M., (2002). Everything but Development :the Doha WTO outcome and Process, Third World Resurgence; Issues No. 112-113, KDN PP6738/1/02., p.20 32 See www.wto.org., retrieved on 23rd September, 2014 33 Zedillo, E., Messerlin, P. & Nielson, H. (2005). Trade for Development: Achieving the Millennium Development Goals. London: Earthscan., p.25 34 Mehter, P. & Chatterjee, B. (2011). Doha Development Round. Prospective outcomes and African Perspective. Global Poverty Summit Johannesburg 35 The Swiss formula is: T1 = (cT0)/c + T0, where T0 is the initial tariff, T1 the new tariff after the cut and c the reduction coefficient that determines the depth of the cut. The smaller the coefficient, the greater is the resulting tariff cut. UNDP. (2003). Making Trade work for People. London: Earthscan Publications., p.136 36 Aggregate Measure of Support or Domestic Subsidies are grouped into trade distorting and non-trade distorting. The Amber Box is considered as directly distorting trade while the Blue and the Green Boxes are considered nontrade distorting subsidies. Any support which by definition should be in the Amber box but with conditions to limit production level by farmers is covered in the Blue box. The Green box is generally non-trade distorting box and normally Government funded and does not involve price support. The definition of the boxes of support provided by the WTO provides a loophole for the expansion of domestic support. States can move domestic support from the amber box into the blue or green box. In other words, such support in the green and blue box would be regarded as not distorting trade. Meanwhile, these subsidies, instead of limiting production as condition, would rather increase production as well affecting market prices. The producer only produces and supplies to make profits. Thus, any support that would offset and increase its production level to the detriment of other producers in a fair and competitive organization would be regarded as unfair. Khor, M. (2007). The WTO's Doha Negotiations and Impasse: A Development Perspective. Penanag: TWN. 37 Fergusson, I.F. (2011). World Trade Organization Negotiations: The Doha Development Agenda. A CRS Report for Congress 38 UNDP. (2003). Making Trade work for People. London: Earthscan Publications. 39 Ibid. 40 About thirty-six African countries under the GSP were able to export industrial products like textiles and other products to the US through the African Growth and Opportunity Act (AGOA) programme. The AGOA scheme led to increment of textile and clothing exports by Sub Saharan African countries from 1% to 1.6% Market Access for Developing country Exports-Selected Issues, A joint paper by the IMF and World Bank, 2002. 41 Ibid. 42 Vandemoortele, J., Malhotra, K., & Lim, J.A. (2003). Is MDG 8 on track as a global deal for human development? New York: UN Publishing. 43 UNDP. (2003). Making Trade work for People. London: Earthscan Publications. 44 UNDP (2005). International Cooperation at a Crossroads: Aid Trade and Security in an unequal world 2005 Human Development Report. New York : Hoechstetter Printing Co. 45 Diao , X., Hazell, P., Resnick, D.,& Thurlow, J. (2007). The Role of Agriculture in Development. Implications for Sub-Saharan Africa. International Food Policy Research Institute, Research Report 153. Washington DC: IFPRI. 46 Ibid. 47 ODI. (2010). Case Studies for the MDG Gap Task Force Report Overview of Bangladesh, Bolivia, Cambodia and Uganda. London: ODI. 48 Zedillo, E., Messerlin, P. & Nielson, H., op. cit. 49 Oxam International. (2004) Stitched Up: How Rich-Country Protectionism in Textiles and Clothing Trade Prevents Poverty Alleviation. Briefing Paper 60. [www.oxfam.org/eng/]. 50 Hertel, T., Hoerkman B., & Martin, W. (2002). Developing Countries and A new Round of WTO Negotiations. World Bank Researcher Observer, Vol. 17. WB., pp.113-140 40
University of Ghana http://ugspace.ug.edu.gh 51 Zedillo, E., Messerlin, P. & Nielson, H., op. cit. 52 Ibid. 53 Ibid. 54 Ibid. 55 Townsend, I., (2006). The WTO Doha Development Round: where next for world trade? A Research Paper 06/43 for House of Commons. pp.12-14. 56 Some observed that the $180 billion U.S. farm bill and the EU's refusal to reform its outmoded Common Agricultural Policy (CAP), led by a Franco-German collusion, made a "mockery of the idea that the Doha round was to be a development round. Cho, S. (2010). The Demise of Development in the Doha Round Negotiations. Texas International Law Journal, Vol. 31. Cicago: Kent College of Law. 57 It contained the basic principles and framework for establishing the modalities in future negotiations. The revised plan for the Doha Round was to achieve some concrete approximation of the members' substantial differences on critical issues--such as the size of the reduction of farm subsidies and tariffs--by July 2005, and then to deliver a deal on the modalities in the upcoming Hong Kong Ministerial Conference in December 2005., ibid. 58 Ibid. 59 Bayoumi, T., (2011). The WTO Doha Trade Round--Unlocking the Negotiations and Beyond. IMF., pp. 3-5. 60 Ibid. 41
University of Ghana http://ugspace.ug.edu.gh CHAPTER THREE THE ROLE OF THE WTO IN PROMOTING GLOBAL PARTNERSHIP FOR DEVELOPMENT (MDG 8) IN AFRICA 3.0 Introduction Economic growth and development in developing countries can be fostered by international trade. The WTO in relation to this has therefore set for itself specific roles towards the realization of the MDG 8. They include; ensuring the participation of developing countries in the MTS, the conclusion of the DDA to address various imbalances inhibiting trade, the Aid for trade initiative and efforts to increase access to affordable medicines in developing countries. This chapter begins by examining the extent to which the WTO has helped in achieving the various targets of the MDG 8. The successes as well as the flaws of the Multilateral Trading System (MTS) in relation to the MDG 8 in Africa is also covered in this chapter. It concludes with the various factors that have inhibited the WTO from realising the MDG 8. 3.1 Trade and development (the participation of DCs in the Multilateral Trading System) Trade is considered as one of the elements through which the MDG 8 and the other MDGs which are development oriented could be achieved. Jobs are created through trade; states are able to realize revenues through trade while incomes are also generated through trade. Irwin reiterates the importance of trade to development of countries by stating that "no closed or isolated economy has performed better than those integrated into the world economy."1 States, therefore, make use of the comparative advantage they have to specialize and increase production which results in higher revenues. There is also movement of technology to enhance 42
University of Ghana http://ugspace.ug.edu.gh efficiency and increase productivity. Foreign Exchange is also generated to foster the importation of capital goods to enhance productivity. With this, domestic producers are able to produce on a large scale and also gain access to markets of advanced countries. Like other DCs and LDCs, African countries are more concerned about developmental issues within the WTO which includes the application of Special and Differential Treatment (SDT), a full implementation of duty-free and quota-free (DFQF) market access as well as the implementation of Preferential market access.2 To African states, such market access preferences would reflect in the amount of incomes and revenues they would generate. This would help improve rural livelihood as well as ensuring infrastructural development. These developmental issues are mostly concerned with agricultural products as well cotton and textiles. This is because African countries are predominantly agro-based states. 3.1.1 Market Access In ensuring a full participation of DCs and LDCs in international trade and for them to make gains from it, there is the need to encourage full implementation of all preferential market access as well as eliminating all forms of trade distorting barriers. One of the trade preferences which need a CRITICAL ANALYSIS is the SDT. The SDT is simply a set of privileges applied to and enjoyed by DCs and LDCs in international trade.3 This treatment does not apply to industrialized or developed countries and they allow DCs and LDCs favourable access to markets of developed countries and also grant them flexibilities in in some WTO measures. The SDT Agreement therefore implies that, the WTO recognizes the differences in 43
University of Ghana http://ugspace.ug.edu.gh development levels among its members. It also reiterates the need to help DCs meet development challenges through trade; thus an agreement to meet MDG 8. At the 2005 Hong Kong Ministerial Conference, advanced countries within the WTO agreed to grant DFQF market access to goods from DCs and LDCs including African countries. Before the Uruguay Round, the provisions of the SDT provided a legal basis for the Generalized System of Preferences (GSP), which is a component of the SDT. The GSP gives LDCs in Africa a different identity from other DCs in Africa and also advanced countries. In other words, preferential treatment of LDCs under the GSP is different from other DCs. However, the enhanced access to markets provided by these developed countries did not reap enough benefits. This is because the preferences were also governed by strict rules of origin and because SDT was not a multilateral agreement, granting countries easily graduated some LDCs to DCs per their own discretion.4 SDT in Post-Uruguay Round has also failed to consider the different levels of development in member countries within the WTO. This is because while some of the provisions in the new agreement specify the extent and scope of a particular treatment, others give transitional periods for both advanced and DCs to fully meet obligations.5 These are applied to reciprocity, tariff binding, as well as the use of export restrictions. In addition, some of the provisions of the SDT do not oblige developed countries to grant technical assistance to DCs especially producers in African countries in order to help them fulfil their commitments and also develop their capacities. 44
University of Ghana http://ugspace.ug.edu.gh Furthermore the use of rules of origin in GSP under the SDT is still prevalent under the new agreement. Rules of origin require that for all exports that are eligible for the DFQF access, the value added to the inputs for their production must be ascertained.6 A final product must meet certain requirements with regards to inputs and other materials used in its production. This is to specify the nationality or geographical location of the product in order to be eligible for trade preferences. Goods can be produced wholly in a country or may contain some material from another country in its production. Thus, many advanced countries set guidelines to make clear the conditions, types and the quantity of imported materials needed for a product. This is to make the final product meet the standards of rules of origin and also to enjoy the preferential treatment. This is to avoid trade deflection-i.e. a situation whereby a country may use another state with trade preference to import goods into a country or a free trade area (FTA) providing the particular preference.7 The rules of origin requirements are seen as concealed protectionist measure due to its cumbersome value- added requirements. For African countries, such requirements appear unrealistic. With reference to the EU's "Everything but Arms" (EBA) initiative, many LDCs and DCs in Africa will find it difficult to enjoy the DFQF access. The EBA Initiative allows DFQF access for all goods from LDCs and DCs, including African countries with the exception of arms and armaments to EU markets. In Africa, most secondary or intermediate products for the production of a final good is imported; thus, the rules of origin applied by EU in the EBA Initiative will mean a small percentage of goods from African countries would have market 45
University of Ghana http://ugspace.ug.edu.gh access through the DFQF access. Such goods would mainly be raw materials or primary products. In effect, the EBA Initiative would not only kill manufacturing and processing industries in Africa but also lead to the laying of many employees in the region. In other instances, the EBA Initiative curtails human livelihood and human development as both domestic and foreign industries take advantage of EBA trade preference. A 2013 report by Inclusive Development International and Equitable Cambodia (IDIEC) shows that most individuals in the rural communities have been displaced due to the acquisition of large area of land for the development of agro industries.8 In as much as the construction of agro-based industries would create employment opportunities to minimize poverty, the displacement is likely to expose individuals to communicable diseases. Rules of origin create insufficient production and fails to consider the inequality that exist in factors of production as well as other production costs especially between advanced and developing countries. This is because they normally restrict importation of intermediary inputs thus investments will be diverted by relocation of private investors and producers. This curtails competition in foreign markets development and reduction of poverty among DCs and LDCs.9 There has however been a significant increase in the imports from DCs and LDCs into markets of developed countries that have either waived or soften its rules of origin requirements. Statistics show that while Africa's imports to the US increased by US$614 million, as a result of the waiver on rules of origin under the 2001 African Growth and Opportunity Act (AGOA), more jobs were also created in Africa with Lesotho recording about 10,000 jobs for its citizens.10 This initiative increased revenue of citizens and also improved rural livelihoods. 46
University of Ghana http://ugspace.ug.edu.gh Meanwhile the 2013 MDG-Gap Task Force Report indicates that, although there have been substantial reduction on domestic supports and tariffs, developed countries have resorted to the use of non-tariff barriers (NTBs) on especially agricultural goods from DCs including African countries.11 Figure 1 The figure above confirms that states have now resorted to the use of NTBs. In the figure, developed countries NTBs on agricultural products are comparatively higher than the rest. Although, tariffs remain significantly low, NTBs have generally been used to replace tariffs. The figure, thus, shows the limited market access DCs have in developed countries. According to the 2012 World Trade report, such non-tariff measures (NTMs) are a result of the current economic crisis prevalent in advanced countries.12 Thus, their use is mainly to increase national welfare and also meet the global economic challenges. Notwithstanding, NTMs also affect the 47
University of Ghana http://ugspace.ug.edu.gh development of DCs because their gains from trade liberalization are barely realized. In talking about Market access, it is important to study its effects on some African countries: An UNCTAD Report indicates that Zambia has faced several non-tariff barriers (NTBs) for its exports.13 These barriers include SPS requirements, technical barriers, quotas, market standards, restrictive rules of origin and other tariff structures and import requirements. For instance, as a member of the South African Development Community (SADC), Zambia enjoys several market access opportunities to the EU and other regional markets. However, its export in Sugar faces restrictions in EU under the EBA.14 The use of quota restrictions in the SADC market also constraints the exports of Zambia. In both instances, the country suffers from the high costs of meeting the cumbersome rules of origin, restrictive product specification as well SPS standards. These provide limited opportunities for growth and raising enough revenues. Zambia is also eligible to the markets of USA, Japan, and other developed countries under the GSP. However, the low MFN rates for the country's main exports like copper means such preferences are not beneficial.15 Again, since these preferences are unilateral in nature, they are easily eroded by the granting countries. Furthermore, due to the limited infrastructural capacity of Zambia, its exports under AGOA are normally done through countries like South Africa.16 Thus, its benefits are normally insignificant to allow enough revenue for development. In short, Zambia only makes trade gains in its non-traditional exports like sugar and these are not much beneficial in terms of revenue generation. 48
University of Ghana http://ugspace.ug.edu.gh Like Zambia, Uganda has been suffering consistent NTBs and other protectionist policies for its major traditional products like coffee and tobacco. Consumer demands in EU markets have highly influenced the use of standards and other environmental trade barriers. The use of banned pesticides like DDT on the farm products in Uganda has largely curtailed access into EU markets. This is because the use of DDT as pesticides is not covered under the Directive 2000/29 EC of the EU.17 Such standards reduce foreign exchange earnings, cause depreciation of the country's currency and also affect the lives of rural producers. Furthermore the EU Common Agricultural Policy (CAP) has led to a significant reduction of revenue and income to be generated from Uganda's exports.18 This is because the subsidies granted EU producers under the policy results in dumping of their surplus products in the markets at lower prices. Thus, exports from Uganda do not meet the demands to compete in global markets. The current erosion of particular trade preferences has also led to increased free trade agreements (FTAs) between DCs and developed countries over the years. The establishment of FTAs are the only African countries would enjoy certain preferential treatments. Depending on the agreement, such arrangements are normally reciprocal and cover main trading products of countries involved. Such products are normally those which cover consumer preferences and also provide increased revenue to both producers and governments. A current example is the Economic Partnership Agreement (EPA) between the Economic Community of West African States (ECOWAS) and the European Union (EU). 49
University of Ghana http://ugspace.ug.edu.gh 3.1.2 Negotiation Processes and Outcomes within the WTO Ensuring the participation of all members in the Multilateral Trading System (MTS) also includes fair processes and outcomes in trade negotiations. According to the 2002 UNDP Human Development Report, "Human development requires fair governance--a framework of institutions, rules and established practices that ensure fair processes and outcomes secured through participation of people and accountability of the powerful."19 Fair processes yields fair outcomes and this is important for the realization of MDG 8. It therefore sees democratic governance as a major step to a country's development. Although, the WTO has reaped significant tariff reductions through a number of rounds, its processes and procedures of negotiations have largely been unfair and thus limiting the participation of DCs. The situation has led to lack of cooperation to conclude the DDA. Given historical antecedents to many ministerial conferences of the WTO, it could be factually stated that processes taken in concluding trade issues within the MTS is highly problematic and debatable. Content as well as participation issues flood almost every ministerial conference of the WTO, thus calling for abrupt ends to these conferences. DCs and LDCs have normally been side-lined in drawing content issues and concluding WTO texts during Ministerial conferences. This normally results in non-development friendly outcomes for African countries. A typical example is the Cancun Ministerial conference which ended abruptly due to lack of understanding in determining content issues and attempts to side-line developing countries.20 The lack of understanding in agreeing on how member states should cut their subsidies and tariffs as well as issues regarding agriculture and cotton, meant that tensions and misunderstandings between developed countries and DCs would curtail the progress of the MDG 8. 50
University of Ghana http://ugspace.ug.edu.gh Although there were some issues such as food stockpiling to ensure food security, were agreed on during the 9th Ministerial Conference in Bali, important decisions with regards to the Agreement on Agriculture (AoA) which remains the core argument of African countries is yet to be concluded. 3.2 Aid for Trade Initiative (AfT) Market access is an essential precondition to development but not exclusively exhaustive. To be able to exploit opportunities created by enhanced access to markets, it is necessary to build trade capacities such technical, productions as well as financial capacities. According to Aschenaki, inadequate access to roads, technology, market information and productive assets like capital, increase the price of Sub-Saharan African exports by 15%-20%.21 Such situations create difficulties in acquiring market outputs and thus increasing costs of inputs. In other words, domestic trade-related constraints can negatively affect the impact trade expansion could have on economic growth and poverty. Lack of capacity has largely contributed to the marginalization of African countries in global trade and thus inhibited their development. Without measures to solve these deficiencies and inequalities, international trade would yield few gains for both governments and producers in developing economies like Africa .Thus, the AfT, which is a form of Overseas Development Assistance (ODA), was introduced to provide both technical and financial assistance to DCs with limited capacity to take advantage of enhanced market opportunities.22 By this, the supply as well as infrastructural capacities of DCs and LDCs would be strengthened to allow mass production and enhanced international trade. 51
University of Ghana http://ugspace.ug.edu.gh AfT is simply about building trade capacities in DCs and LDCs. Such capacities include skills of trade experts, infrastructure and other programs to enhance production and supply. The aim of the AfT is to expand trade through assistance from developed countries as well as Multinational Corporations (MNCS). The provision of assistance to help build the capacity of DCs and LDCs is also one of the indicators in assessing the progress of the MDG 8. It is therefore very vital in bridging the development gap between the developed countries and DCs. AfT therefore helps DCs and LDCs build productive capacities, reduce trading costs and increase trade infrastructure in order to take advantage of trade opportunities. This would increase revenue to meet development challenges and also improve on livelihood. The 2005 Hong Kong Ministerial Conference increased international awareness for the AfT. It called on developed countries as well as other international donors to allocate portions of their respective ODAs to enhance the capacity of DCs and also assist them in implementing as well as benefitting from WTO Agreements.23 Thus, all international stakeholders increased their efforts in order to boost the supply capacity of DCs and LDCs. The WTO further outlined six broad areas under the AfT initiative and these include; trade policy and regulation, trade development including investment and public-private partnership, trade related infrastructure, building productive capacity, trade related adjustments, and other trade related needs. Thus, the WTO does not only coordinate the smooth dissemination of AfT but provides resources for trade facilitation as well. 52
University of Ghana http://ugspace.ug.edu.gh Figure 2 The figure above shows the significant increase in AfT flows to DCs and LDCs since 2002. The figure confirms the increased commitments of donor countries and institutions to helping achieve the MDG 8 through AfT. However, it should be noted that much of AfT flows were used in building economic infrastructure and productive capacity during the period. This is very essential in helping reduce trade costs and ensuring competition in global and regional markets in DCs and LDCs. AfT into developing economies including Africa have reduced significantly since 2011.24 This has been attributed to the Eurozone crisis as well as the economic meltdown in the United States. Donor countries have however shifted focus to their respective economies in order to address its 53
University of Ghana http://ugspace.ug.edu.gh challenges. In other instances, the growing level of insurgency and militancy in Africa has also shifted funds from building trade capacities to boosting African states militarily. The WTO, in partnership with the Food and Agriculture Organization (FAO) and other international institutions, has also launched the Standards and Trade Development Facility (STDF) to equip DCs with expertise and techniques with respect to sanitary and phytosanitary standards (SPS).25 This would also help train stakeholders in African countries to analyse and implement policies and measures regarding food safety, animal and plant health. The WTO further coordinates meetings to measure the progress of AfT in terms of development. As a result, various initiatives have emerged under the AfT to help in capacity building among African countries. These include; the Enhanced Integrated Framework (EIF) and the TradeRelated Technical Assistance and Capacity Building (TACB). The 2005 HDR indicates that annual TACB is worth $21 billion of which 70% is allocated to solving supply constraints of DCs as well as LDCs and the remainder for enhancing institutional capacity building in trade policy.26 The Aft initiative has strongly integrated many African economies into international and regional markets. The initiative not only enhanced supply infrastructure but it has also improved skills of experts and also enhanced institutional reforms to boost production and supply of goods. This helped many African countries in exploiting various trade opportunities to their benefits. Trade costs, including transport and other distribution costs, have also reduced significantly in Africa through AfT programmes. Custom delays are regular at African ports, borders and 54
University of Ghana http://ugspace.ug.edu.gh harbours. These are normally as a result of lack of expertise or inadequate personnel. At other instances, huge sums of money are paid for swift facilitation of services. Custom delays, thus increases trade costs by an average of 0.8% around the world.27 Thus, in Africa, AfT has been in the form of technical assistance, customs reforms, building infrastructure, integrated trade facilitation programmes and other trade policies. Such initiatives increase exports and create more job avenues for individuals in Africa. For instance, in 2010, Tunisia reduced cargo delays by two-thirds, increased exports by more than $400 million and also created 50,000 full-time and part-time jobs for the firms through the Export Development Programme (EDP).28 In addition, the WTO and the UNDP have supported the strengthening of trade capacity in Madagascar since 2003.29 The aid from these institutions has helped addressing the developmental interests of Madagascar. In as much as AfT is intended to boost development in DCs and LDCs, equally problematic is its lack of coherence and narrow focus on implementing WTO Agreements.30 Some of these trade policies rather negatively affect markets which tend to boost the confidence of rural producers. Such markets are what the rural livelihoods depend on. Ghana has been a beneficiary to the AfT initiative and it has achieved considerable success under AfT programmes. One important rationale of AfT is to address national trade priorities through the formulation processes of domestic policies. In Ghana, the focus of AfT is mostly on Agriculture since it is the means by which government and individuals generate most of their revenues and incomes. Ghana receives significant amount of AfT flows which goes into economic infrastructures and building of productive capacities in some important sectors of the 55
University of Ghana http://ugspace.ug.edu.gh country's economy. For instance in 2005, 50% of AfT flows was allocated to the agricultural sector while about 93.6% of AfT was used in building the capacity of the sector in 2007.31 Apart from the role of multilateral and bilateral donors in building the trade capacity of Ghana, other organizations have also played major roles. In terms of capacity building, several programmes have been organized in collaboration with the WTO. The German GIZ has adopted the Market Oriented Agriculture Programme (MOAP) to improve the abilities of all stakeholders in the agricultural sector in order to compete in domestic, regional and global markets.32 The programme has enhanced private organizations as well as public institutions with skills to improve on the delivery of services in the country. Like the MOAP, Ghana has also benefitted from the United States' (US) Feed the Future (FtF) Initiative.33 The Programme aims at reducing harvest losses, investing in rural infrastructure, enhancing the regulatory and policy systems to meet demands of regional trade and also ensuring efficiency in value chains. The United States Agency for International Development (USAID) Agricultural Development and Value Chain Enhancement (ADVANCE) Programme is one of the programmes under the FtF. In Ghana, the three Northern regions (i.e. Upper West, Upper East and Northern region) continue to be marginalized. Thus, the programme, worth US $32 million, has improved competitiveness in key agricultural commodities in domestic and regional markets with a clear focus on the three Northern regions. Other programmes under the FtF include the Ghana Strategic Support Program (GSSP), Integrated Coastal and Fisheries Governance (ICFG), Peace Corp Volunteers, Business Sector 56
University of Ghana http://ugspace.ug.edu.gh Advocacy Challenge (BUSAC) and the Monitoring, Evaluation, and Technical Support Services (METSS).34 These AfT induced programmes have helped Ghana take advantage of its trade opportunities to ensure food security, ensure poverty reduction, improve living standards and address development challenges. The Export Marketing and Quality Awareness Project (EMQAP) under the initiative of the African Development Bank (AfDB), is also an AfT induced programme designed to build capacities of all agricultural stakeholders to competitiveness in the global markets.35 The EMQAP, which covers products like pineapple, mango, pawpaw, cassava and vegetables, has increased incomes of producers and farmers to a substantial level. This, in otherwise, has helped alleviate poverty and hunger in Ghana-i.e. reaching MDG 1. In terms of national domestic strategies, Ghana adopted the Private Sector Development Strategy (PSDS) to strengthen its financial sector in a bid to stabilize the macroeconomic environment of the country.36 The initiative has introduced new trade policies, developed infrastructure and also reformed the public sector. These improvements has not only lowered trade costs but also expanded trade in the country. One important aspect is that the AfT initiative has been carried out by other international bodies. In 2005, The World Bank supported the Ghana Trade and Investment Gateway Project to make infrastructural investment in connection with the country's Export Processing Zone (EPZ).37 The Joint venture resulted in investments worth US $1.2 billion, also created 305,874 jobs for Ghanaians and 10,994 jobs for foreigners and reduced logistic costs significantly. 57
University of Ghana http://ugspace.ug.edu.gh As a DC, Ghana has derived much benefit from the AfT in addressing its special needs (i.e. Target B of MDG 8) in terms of building productive capacities to ensure export diversification and competitiveness in global trade. However, the initiative has recorded enormous failures. With the substantial flow of AfT to Ghana, the country has failed to make good use of it in addressing development challenges. This is because Ghana lacks a unified or coherent AfT strategy or framework to ascertain that the aid flows to its Agriculture sector has achieved desired outcomes. Meanwhile, most donor countries and institutions disburse AfT into other areas they are interested in rather than trade related areas. Despite the role of the AfT in building capacities and increasing competitiveness in domestic and global markets for Ghanaian producers, highly subsidized commodities from advanced countries have plunged local producers, especially those in the Northern part, into realizing low incomes.38 The issue of export subsidies and domestic support for producers in developed countries therefore defeat the aim and objectives of the AfT. It further widens the inequality gap between developed and DCs as well as LDCs, which implies a failure in reaching MDG 8. In fact, research conducted by the International Food Policy Research Institute (IFPRI) indicates that Ghana has done little to improve its agricultural sector.39 There has been unequal distribution of the agricultural budget to enhance overall productivity even though its agriculture expenditure has increased significantly. Thus, some parts of the country, especially the Northern part hardly improve rural livelihoods. 58
University of Ghana http://ugspace.ug.edu.gh Zambia, another beneficiary of AfT programmes, has been increasingly reliant on aid from donors since the 1980s. Donor countries and agencies have therefore had significant influence in setting policy priorities, designing economic programmes, implementation of policies, and assessment of policy outcomes.40 This has helped Zambia in building institutional capacity to respond to requirements, challenges, and advantages inherent in the participation of the Multilateral Trading System (i.e. WTO). AfT in Zambia has also encouraged the country to undertake profound trade reforms in order to create a market-oriented economy which would contribute to economic growth and development.41 Zambia benefitted from a 40 million euro export development support programmes under the auspices of the EU. The programmes which included the Export Development Programme II (EDP II) and the Mining Sector Diversification Programme (MSDP), did not only provide credit to producers involved in non-traditional exports but also supported the coffee and tobacco sectors as well.42 The programmes have led to significant increment in the production and export of tobacco and coffee in Zambia. In addition, the Zambia Trade and Investment Environment (ZAMITE) Project, which was supported by the USAID, allowed free trade advisory services in the form of capacity building to Zambia Ministry of Commerce, Trade and Industry (MCTI) and other private trade sectors.43 The advisory services has equipped stakeholder with skills on negotiations within the WTO, strengthened the technical capacity of the MCTI and also provided technical support for Safeguard measures on Agriculture. 59
University of Ghana http://ugspace.ug.edu.gh The country also benefitted from technical and advisory services from the Commonwealth Secretariat, the WTO and the World Bank. For instance, the Joint Integrated Technical Assistance Project (JITAP) is a coordinated programme of assistance financed by the WTO to help build trade related capacities of Zambia.44 In Zambia, the EIF educated stakeholders on the relationship between trade and economic development. Thus, trade became a major component of the National Development Strategy (NDS) and Poverty Reduction Strategy (PRS) of Zambia. The country has been able to identify, and to some extent, address its supply-side constraints and also promote trade opportunities as well as improving export diversification. Zambia also benefitted from IDLO AfT initiative under the Finnish Government.45 The programme equipped stakeholders with better understanding of the EPA text and also supported the Patents and Companies Registration Organisation (PACRO) with sector training concerning IPRs. Like other African countries, majority of producers are the rural peasant farmers who have little knowledge on relevant farm practices. Meanwhile, most AfT initiatives are geared towards producer organizations and other government stakeholders. The benefits of these capacity building projects are not realized by these farmers in order to alleviate poverty in such areas.46 The AfT hardly tackles local capacities. It is much concerned with regional and producer organization levels. 60
University of Ghana http://ugspace.ug.edu.gh Furthermore, a study conducted by the German Development Institute (DIE) indicates that stakeholders in the capacity building strategy find it difficult to differentiate between national and regional priorities.47 Thus, some projects end up addressing regional problems rather than national priorities. AfT in Uganda has been very beneficial to the country's development. The World Customs Organization (WCO) used its Time Release Study (TRS) to identify constraints inhibiting trade facilitation in Uganda and further provided technical assistance and other recommendations to enhance efficiency at the borders.48 The Uganda Private Sector Foundation (UPSF) also supports businesses in Uganda with development schemes.49 The Programme gives financial support, supports micro, small and medium-sized enterprises with expertise in order to become more productive and competitive in global markets. The programme has thus enhanced production capacities of Ugandan producers. Uganda has also benefitted from the International Centre for Trade and Sustainable Development (ICTSD) and the Department for International Development (DFID) under the AfT.50 Through these centres, Uganda has been able to assess and submit needs assessments to help in implementing IPRs and also to acquire donor finance for development. Meanwhile the MDG-Gap Task force Report indicates that, the AfT flows have been highly concentrated in the Agriculture sector while leaving other sectors.51 The effects have been 61
University of Ghana http://ugspace.ug.edu.gh increased cost in doing business as well as unemployment problems. Thus, there is the need for AfT to be pushed into other sectors as well. In Egypt, UNIDO implemented a four-year project in Egypt known as the Egyptian Traceability Centre for Agro-Industrial Exports.52 The programme has trained more than 1,500 farmers, producers and other stakeholders in the Agro-Industrial sector to ensure food quality and other safety standards. Egypt has also benefitted from an 80 million euros funding by the EU for trade related assistance.53 This is to enhance its competitiveness in global trade, improve infrastructure necessary for trade liberalization and also aid in implementing the EU-Egypt free trade area (FTA). The various countries studied have shown significant successes of the AfT in terms of boosting trade in Africa by enhancing trade capacities. However, one problem which runs through the study is that AfT is normally donor-priority driven. It is geared towards donor priorities. Donor countries and institutions invest in areas where they could benefit rather than areas which would benefit DCs and LDCs. Thus, the initiative normally boosts the economies of the advanced countries rather than DCs and LDCs. Furthermore, technical advices are normally biased and restricted, underfunded, and they have very weak links to development.54 62
University of Ghana http://ugspace.ug.edu.gh 3.3 Access to medicines Wide-spread of infectious diseases have claimed millions of lives every year in Africa. According to the World Health Organisation (WHO), in 2012, malaria and tuberculosis claim approximately 2 million lives mostly in African countries with the poor, children and women being the most vulnerable.55 This is because majority of the people living in Africa, especially those in rural areas, do not have access to essential medicines on a regular basis. With the help of the WHO, African governments have over the years advocated for access to medicines to provide for the health needs of the growing population. The partnership between African countries and the WHO has raised more than 1000 programs in Africa to fight AIDS, tuberculosis and malaria. For example, Novaritis, has since 2001, supplied 215 million treatments of Coartem for Malaria in Africa at lowered prices. Access to health care, including medicines, is a fundamental human right enshrined in most international treaties, including the African Charter on Human and People's Rights and also recognized by states all over the world. Despite this, access to medicine in reality is far from reach in developing countries especially countries in Africa. In most African countries, the issue is not only about the accessibility of the medicine but also its affordability. Today, health care initiatives have become a global concern. Solutions to pandemic and epidemic diseases no longer rest on the WHO but all governments, civil groups, and other international bodies. The introduction of access to medicines, as a target in the MDGS under Goal 8, reiterates the importance of good health to development. Essential medicines save lives and improve health and this has a domino effect on the level of development. Many African 63
University of Ghana http://ugspace.ug.edu.gh countries have failed to attain their health-related MDGs due to lack of access to essential and affordable medicines. In light of the above, the WTO rates access to essential medicines is one of its priorities in achieving the MDG 8. In order to achieve this, the WTO has captured the application of Intellectual Property Rights (IPRs) into the broader public health objectives. While it works in close cooperation with the World Health Organization (WHO) and the World Intellectual Property Organization (WIPO) to provide affordable medicines to African countries, it also focuses on making clear the manner by which the flexibilities within the TRIPS Agreement could be used with regards to public health.56 The Doha Declaration on the TRIPS Agreement and Public Health has also called for multilateral cooperation to support African governments in making use of the TRIPS flexibilities to in order to help attain the Target E (i.e. access to medicines) of the MDG 8.57 The Declaration gave credence to public health rather private ownership of intellectual property. For instance, considering the insufficient and limited manufacturing capacities of African states, the TRIPS flexibilities allows the use of generic versions of patent rights under compulsory license to acquire affordable medicines. According to the WTO, "Compulsory licensing is when a government allows someone else to produce the patented product or process without the consent of the patent owner".58 Given these contributions by the WTO to increase access to quality and affordable medicines into Africa, the continent still suffers from inadequate access to medicines amidst growing 64
University of Ghana http://ugspace.ug.edu.gh pandemics like Ebola in West Africa. People living with HIV also lack access to various approved drugs causing the disease to spread. This has also further affected the treatment of such diseases in the region and thus, reflecting a global challenge. While some of the factors inhibiting access to medicines in Africa are due to the TRIPS Agreement, others are largely problems inherent within the continent. The Patent Right within the TRIPS Agreement of the WTO has been quite problematic with regards to access to medicines. This is because such patents give their owners the right to exclude all others from unauthorized making, using, selling or distributing the product, thus giving a `legal monopoly' right.59 The resulting effect has been higher prices of drugs which are very difficult for an average African citizen to afford. Another effect of the patent right is the production of low quality drugs normally as close substitutes at lower cost which is would likely be afforded by African countries. Although, the problem of patent rights has largely been addressed with the Doha Declaration on TRIPS and Public Health, one issue which seems to undermine access to medicines in African Countries is that relating to Research and Development (R&D). With the level of disagreement on the parts of many pharmaceutical companies on the issue of compulsory license, African countries are likely to encounter threats to good public health. With limited funds, Africa would be starved of new therapies which derived from R&D capabilities exploited by multinational companies (MNCs). 65
University of Ghana http://ugspace.ug.edu.gh On the other hand, many African countries are yet to incorporate the provisions of the TRIPS Agreement, especially its flexibilities, into their national laws. Very few African countries, including Ghana, Zambia, Zimbabwe, Eritrea, and Mozambique have made used of the TRIPS flexibilities to issue compulsory licensing.60 A recent study, conducted in Tanzania, reveals that the non-inclusion of TRIPS flexibilities in Tanzanian law is one of the factors hindering access to essential medicines in the country as the range of generics local manufactures can produce is limited.61 This is normally due to limited funds to pay patent holders their deserved remunerations. Other factors inhibiting access to medicines in African countries include limited logistic supply, storage problems, substandard drug quality, inappropriate selection of drugs, wasteful prescription and inappropriate use, and inadequate production.62 Thus, it is essential to build the capacities of African countries in terms of production of health needs as well. For a continent that is being highly affected by one of the most deadly diseases of the 21st century (i.e. Ebola in West Africa) as well as other epidemics, the need for access to affordable medicines is very salient. Access to essential and affordable medicines will not only help realize MDG 8 but also other health related MDGs. 3.4 Implications of some WTO rules and Agreements to the realization of MDG 8 The MDG 8 makes the work of the WTO pronounced, in the sense that the multilateral trading system (MTS) must ensure that its rules and agreements help in the development of developing countries. In other words, the trading regime and its members of developed economies should be 66
University of Ghana http://ugspace.ug.edu.gh committed to the development and reduction of poverty of other less developed members like African countries. For African countries, external trade remains one of the major strategies to achieving sustainable growth and development. It should contribute to the generation of full employment, fulfilment of needs in areas of food, health, education, and all of this in the context of environmental sustainability. At the international level, it should cater for the needs of African countries, with guidelines and practical measures that improve their terms of trade enhance their export capacity and sustain their balance of payments.63 Most importantly, trade policy should be seen as contingent on the specific conditions of each country depending on its level of development. Since its inception, the WTO has created a forum for negotiation, settling of disputes as well as making strong efforts to strengthen the principle of non-discrimination. While the strengths of WTO are laudable, its weaknesses especially towards the development of DCs and LDCs are also enormous. The weaknesses of WTO are highly evident in its rules and agreements guiding the Multilateral Trading System and its contribution to the development and poverty reduction of African countries in the trade regime. Rules governing institutions should give equal opportunities all members and should be applied on the same measure towards all members. In other words, the weak is protected while the powerful is held in check by the same rules in order not to exploit the weak. However, the rules governing WTO, on the contrary, curtail the DCs as well as LDCs and their development 67
University of Ghana http://ugspace.ug.edu.gh prospects but make the advanced countries more powerful.64 Thus, it further widens the inequality between the advanced and DCs as well as LDCs. The main rules which govern the WTO are documented in about twenty-three mandatory trade agreements of which most of them are related to trade in goods. All the documented agreements however cover trade in goods (GATT), services (GATS) and intellectual property (TRIPS) and they are guided by enforcement mechanisms such as transparency, consultation and dispute settlement. 3.4.1 Dispute Settlement An important aspect of the WTO that makes its rule based trading system unfair and unfavourable to DCs and LDCs is its Dispute Settlement Mechanism (DSM). Article 4.10 of the Dispute Settlement Understanding allows for special attention to be given to challenges faced by developing countries during consultations, yet the implementation and enforcement of this clause has been dormant.65 Moreover, the sequencing or retaliatory measure, which is the last resort to check compliance to the recommendations of the Appellate Body (AB) is unfavourable to and ineffective from African countries. This is due to the limited economic power of African countries;66 thus, it will be essentially unrealistic for an African country like Uganda, to impose a retaliatory measure on a developed country like the US because the former would rather feel its effects. 68
University of Ghana http://ugspace.ug.edu.gh 3.4.2 Trade in goods (GATT) Most African countries hoped to enjoy export advantage from increased access into markets of developed countries after the Uruguay Round due to the various concessions made by the developed countries. This has so far not been realized because although developed countries have reduced their existing tariff concessions to a significant percentage, they currently apply other non-tariff conditions to stifle export advantages of the DCs and LDCs. This means that significant gains from export in order to cater for the development of African states in terms of infrastructure and human capacity remains relatively low and unrealistic. Meanwhile, most African countries also face difficulties in the implementation of the legally binding agreements due to its effect on their domestic producers, domestic trade policies as well as local service providers.67 The failure to address these meant lack of progress in development issues in DCs and LDCs - thus the failure to meet the MDG 8. An effective MDG 8 requires equitable distribution of gains from trade, a well-balanced trading regime, which would save African countries bearing losses as a result of rules governing the multilateral trading system and also rules that should not affect the human development of the ordinary people.68 These are actually covered in the targets of MDG 8. Thus, a failure to address these concerns in the trading regime will mean failure to realize the MDG 8 and the other MDGs. Protectionist measures, inherent in trade in goods, have yielded unsatisfactory outcomes in the development of DCs and LDCs. This is because these countries are not able to gain fully from their comparative advantage. According to UNCTAD, DCs lose an estimated amount of seven hundred billion US dollars in annual export earning as a result of lack of market access.69 The 69
University of Ghana http://ugspace.ug.edu.gh full exploitation by African countries in the markets of advanced countries and their respective positive outcomes would create employment, increase incomes of local producers as well as revenues of governments. This would be a positive gateway towards the realization of MDG 1, which is the eradication of extreme poverty and hunger. Most importantly, the failure to address the lack of policy space which would allow DCs and LDCs make development policies would in the long run affect local industries, health needs, realization of food security targets and other important infrastructural needs which serve as gateway to the realization of the MDGs.70 3.4.3 Agreement on Agriculture (AoA) In addressing the role of the WTO in promoting development and the realization of the MDG 8, it is important to analyse the effects of the Agreement on Agriculture (AoA). This is because Agriculture is regarded as the backbone of most developing countries as incomes, revenue and other sources of livelihood of these countries are mostly earned from it. The issue of Agriculture should therefore be at the heart of WTO development issues but that is not the case. The AoA is fraught with many weaknesses and imbalances which are to the advantage of the developed countries but to the detriment of developing countries.71 The AoA which covers issues on market access, domestic support and export subsidies prohibits the use of quantitative restrictions (eg. quotas).72 States have been restricted to the use of tariffs of which several developed countries have taken advantage to impose high tariffs on agriculture goods from developing countries. Although the various Rounds of Negotiations have seen a 70
University of Ghana http://ugspace.ug.edu.gh significant reduction of tariffs, domestic subsidies in developed countries are still much in existence. This has enhanced their production and supply levels due to the comparatively low cost of production. Domestic Subsidies are grouped in to trade distorting and non-trade distorting. The Amber Box is considered as directly distorting trade while the Blue and the Green Boxes are considered nontrade distorting subsidies.73 In some cases, a domestic support meant to be in the amber box could end up in the blue box. This normally happens when such support is given with the condition that the farmer limits production. The Green box is generally non-trade distorting box and normally Government funded and does not involve price support. The definition of the boxes of support provided by the WTO gives a loophole for the expansion of domestic support. States can move domestic support from the amber box into the blue or green box. In other words, such support in the green and blue box would be regarded as not distorting trade. Meanwhile, these subsidies, instead of limiting production as a condition, would rather increase production as well affecting market prices.74 The producer only produces and supplies to make profits. Thus, any support that would offset and increase its production level to the detriment of other producers in a fair and competitive organization would be regarded as unfair. This is evident in developed countries where subsidies are moved to the Blue and Green boxes respectively to support farmers improve their production levels which in the medium term affect market prices. Good from Africa face stiff competition as excess products are dumped in African 71
University of Ghana http://ugspace.ug.edu.gh markets and sold at a relative low price. As a result, revenues and incomes of producers in African countries are significantly reduced because of increased competition with commodities from developed countries. In 2003, the President of Burkina Faso, Blaise Compaore, called for the elimination of cotton subsidies as well as a compensation for LDCs that suffer losses as a result of such subsidies.75 This was because about ten million cotton producers in African countries like Benin, Burkina Faso, Chad and Mali were largely affected by distortion of world prices as a result of subsidies. The revenue and income generated from the production of cotton is important in Africa for the alleviation of poverty. The discriminatory and prejudicial nature of domestic support makes the realization of MDG 8 difficult. 3.4.4 General Agreement on Trade in Services (GATS) With regards to services, the huge differences in the supply capacities of African and developed countries put the latter in extreme advantage than the former in terms of liberalization under the General Agreement on Trade and Services (GATS).76 The production levels in African countries are comparatively low due to lack of technical expertise, inadequate funds and its interest in primary goods. Meanwhile the unwillingness on the part of developed countries to liberalize labour in the service, which African countries have advantage, makes it difficult in fully realizing the gains of the MDG 8. Liberalizing labour in the service sector would create an opportunity for increased incomes which would improve human development aspects of people living in developing countries. While developing countries would benefit from technical expertise of individuals in developing countries, developed countries would in turn benefit from the cheap labour in developing 72
University of Ghana http://ugspace.ug.edu.gh countries. Meanwhile, others believe that data on impact of liberalizing service are not credible enough to allow DCs and LDCs liberalize the area of services they need to.77 Again, liberalizing basic social services would hinder human development. This is because basic social needs such as water, health and education would be expensive for most individuals in African countries. This would likely affect the achievement and realization of universal primary education (MDG 2), as well as the health related MDGs (MDG 4, MDG 5 and MDG 6). One set-back faced by African countries is the issue of balance of payments (BOP) deficits. This is as a result of significant outflow of profits by services which are owned by foreigners thereby affecting the external debt and debt sustainability of African countries. 3.4.5 Trade Related Aspects of Intellectual Property Rights (TRIPS) The TRIPS Agreement also makes it very difficult for African countries to meet the increasing level of globalization. This is because where the Agreement has led high cost of technology transfers which is normally difficult for African countries to meet the demands of patent holders. The loopholes within these WTO rules and Agreements have rather plunged the African countries into developmental difficulties. Thus, the realization of the MDG 8 is curtailed by the unfairness inherent in the rules. 73
University of Ghana http://ugspace.ug.edu.gh
ENDNOTES
1 Irwin p.12
2 UN (2013).Millennium Development Goal 8. Develop Global Partnership for Development: the Challenge we
face. MDG-GAP Task Force report 2013. New York: UN Publications.,pp.35-37
3 Hoekman, B., Mattoo, A. & English, P. (eds). (2002). Development, Trade, and the WTO. Washington:
IBRD/World Bank., p.504
4 Ibid., pp.505-506
5 For instance the use of quantitative export restrictions has to be publicly announced and if justified, there is a
limitation with regards to time frame and there is an explicit price-based measure for curtailing imports.
Furthermore, DCs whose per capita income is or more than $1000 no longer have right to use export subsidies.
Ibid.,p.506
6 Izam, M. (2003). Rules of Origin and Trade Facilitation in Preferential Trade Agreements in Latin America. Serie
Comercio International No. 31. UN Publications., p.9
7 Garay, L. J. & Cornejo, R., (2002). Rules of origin and Trade Preferences In Hoekman, B., Mattoo, A. & English,
P. (eds). (2002). Development, Trade, and the WTO. Washington: IBRD/World Bank., p.114
8 Also see www.inclusivedevelopment.net/eus., retrieved on 6th July, 2014
9 Garay, L.J. & Estevadeoradal, A. (1996). Proteccion, desgravacion y normas de origen. Integracion y Comercio 0
(January-April). Washington., pp. 2-29
10 UNDP (2005). International Cooperation at a Crossroads: Aid Trade and Security in an Unequal World. 2005
Human Development Report. New York : Hoechstetter Printing Co.,p.128
11 UN (2013).Millennium Development Goal 8. Develop Global Partnership for Development: the Challenge we
face. MDG-GAP Task Force report 2013. New York: UN Publications., pp.39-40
12 WTO. (2012).Trade and public policies: A closer look at non-tariff measures in the 21st century. World Trade
Report 2012. Geneva:WTO., p.7
13 UNCTAD (2006). Zambia and the Multilateral Trading System: The Impact of WTO Agreements, Negotiations
And Implementation. UNCTAD/DITC/TNCD/2005/16 . Geneva:UN Publications., p.12
14 Ibid., p.15
15 Ibid., p.16
16 Ibid., p.17
17 Directive 2000/29 EC protects floriculture in the EU from harmful organisms present in cut flower imports.
Mugyenyi, O. & Naluwairo, R., (2003). Uganda's access to European Union Agricultural Markets. Challenges and
Opportunities. ACODE Policy Research Studies. No. 6. Kampala: ACODE., p.11
18 Ibid., pp.12-13
19 UNDP. (2003). Making Trade work for People. London: Earthscan Publications.,p.49
20 Khor, M., (2003). Analysis of the Collapse of the Cancun Ministerial. Penang:TWN.,pp.1-7
21 The inadequacy of rural roads raises transaction costs, reduces farm-gate prices and returns to labour and weakens
market incentives. It helps explain why it is not uncommon for small farmers in Sub-Saharan Africa to receive 10%­
20% of the export price of their produce, with the remainder being lost to transport and market costs. Aschenaki, B.
(2004). Transport Costs in Ethiopia: An Impediment to Exports. Background Study for the World Bank's FY04
Country
Economic
Memorandum
for
Ethiopia.
Washington
DC
[http://siteresources.worldbank.org/INTETHIOPIA/Resources/ PREM/Ethiopia-Transport_Cost-Final.pdf]. May
2005
22 WTO (2009). The WTO and Millennium Development Goals. WTO., p.7
23 UN (2013).Millennium Development Goal 8. Develop Global Partnership for Development: the Challenge we
face. MDG-GAP Task Force report 2013. New York: UN Publications.
24 Ibid., p.43
25 WTO (2009). The WTO and Millennium Development Goals. Geneva: WTO., p.8
26 UNDP (2005). International Cooperation at a Crossroads: Aid Trade and Security in an Unequal World. 2005
Human Development Report. New York : Hoechstetter Printing Co., p.144
27 Soft infrastructure refers to institutional features such as trade policy, customs regulations, border crossings and
the business environment. Hard infrastructure refers to physical infrastructure such as energy grids, ports, railways
and roads. OECD/WTO. (2013). Aid for Trade in Action. OECD Publication., p.35
28 World Bank. (2011). Leveraging Trade for Development and Growth: The World Bank
74
University of Ghana http://ugspace.ug.edu.gh Growth Trade Strategy, 2011-2021. Washington D.C: World Bank. 29 OECD/WTO. (2013). Aid for Trade in Action. OECD Publication., p.67 30 After 15 years of "cooperation" with the European Union, Senegal's fisheries sector is in deep crisis. Stocks have been severely depleted, disrupting the artisan sector, pushing up fish prices in local markets and jeopardizing supplies to canning factories producing for export. Jensen, Michael Friis. 2005. "Capacity Building for Pro-Poor Trade: Learning from the Limitations in Current Models." In UNDP (2005). International Cooperation at a Crossroads: Aid Trade and Security in an Unequal World. 2005 Human Development Report. New York : Hoechstetter Printing Co., p.144 31 Deere, Carolyn. 2005. "International Trade Technical Assistance and Capacity Building." In ibid.,p.18 32 The Components of the programme are promotion of selected value chains; strengthening of private sector organisations; and improving service delivery of public sector institutions., ibid., p.19 33 The USAID 2011-2015 multi-year FtF strategy is aligned with the Government of Ghana's Medium Term Agricultural Strategic Implementation Plan (METASIP) and the Comprehensive Africa Agriculture Development Program (CAADP) compact. Ibid., pp. 19-20 34 The GSSP has $17M to focus on agricultural research and policy platforms that will ultimately modernize the agriculture sector, particularly staple crops, through 2013. The ICGF is a four-year, $10M program designed to assist Ghana to sustainably manage its coastal and marine ecosystems and improve the livelihoods and food security of coastal communities through 2013. The Peace Corps Volunteer Peace Corps volunteers will support agricultural production of maize, rice, and soybean, improve farmer business and marketing skills, ensure a greater role for women, build bankable credit-worthy programs, test alternative on-farm or processing energy options, and extend new technologies in the three northern regions of Ghana through 2013. BUSAC is a challenge fund with pooled funding from Danida and the EU is receiving $4M from USAID to work on improving the business environment in Ghana to facilitate private sector growth, including in the agricultural sector, through 2014. METSS is a 3 year program implemented by USDA ending in 2013. METSS supports USAID/Ghana in the design and oversight of new programs under FtF, provides direct technical support to the implementation of Ghana's Medium Term Agriculture Sector Investment Plan (METASIP), and provides monitoring and evaluation services for both FtF and METASIP. Ibid., pp.19-20 35 The Export Marketing and Quality Awareness Project has the goal of increasing export earnings of non-traditional agricultural products. Components of the project are production and productivity enhancement; export marketing promotion and infrastructure improvement; capacity building; and project management and coordination. Ibid., p.19 36 OECD/WTO. (2013). Aid for Trade in Action. OECD Publication., p.66 37 World Bank (2008). What is the World Bank doing on Aid for Trade? A draft prepared by the World Bank. 38 Khor, M., & Hormeku, T., (2006). Globalization, Liberalization and Protectionism. Impacts on Poor Rural Producers in Developing Countries. The Experience of Ghana. Penang: TWN.,pp.64-66 39 Although real expenditures are increasing, the share spent on the agriculture sector has stagnated due to disproportional disbursement. The average annual amount spent per unit area was highest in the Greater Accra region (GHў 151.8 per square kilometre) -- three times higher than the amount spent in the next tier of regions, Central, Upper East, Volta, and Eastern. The Northern region attracted the least amount (GHў 9 per square kilometre). IFAD. (2012). Republic of Ghana, Country Programme Evaluation. Report No. 2433-GH. Rome: IFAD.,pp.15-16 40 Chisala , V., (2006). Foreign Aid Dependency: the Case of Zambia. London:S OAS., p.7 41 Brolйn, K., Wilska, K. & Bonsdorff, M. (eds) (2007).Aid for Trade: from policies to practice. The cases of Mozambique, Tanzania, Vietnam and Zambia. Erweko Painotuote Oy., p.260 42 Ibid., p.262 43 The project was established to improve the trade and investment environment. Ibid., p.262 44 Ibid., p. 263 45 The programme, with an overall budget of 1,243,248 euros, was structured to respond to several needs within different sectors in four countries. The programme was intended to target primarily Zambia and to a lesser extent Ethiopia. Mozambique and Namibia were intended to benefit from the EPA component. N'gona, S. & Dube, C. (2012). Aid for Trade and Economic Development. A case study of Zambia. Lusaka: CUTS International., pp.56-59 46 Brolйn, K., Wilska, K. & Bonsdorff, M. (eds) (2007).Aid for Trade: from policies to practice. The cases of Mozambique, Tanzania, Vietnam and Zambia. Erweko Painotuote Oy., pp.289-302 47 Voionmaa, P. & Brьntrup, M. (2009).German Aid for Trade. Past experience, lessons learnt, and the way forward. Bonn: DIE 75
University of Ghana http://ugspace.ug.edu.gh 48 The Time Release Study (TRS) is a tool developed to assist customs administrations in identifying bottlenecks and propose solutions to improve trade flows. With data collected through automated systems on records, questionnaires and surveys, the task force delivered very specific observations on the work needed to facilitate trade to and from Uganda. Senadza, B. & Laryea, A.D.A. (2012). Managing Aid For Trade And Development Results. Ghana Case Study. Policy Dialogue for Aid for Trade. A draft Report., p.39 49 The UPSF comprises 125 business associations, corporate bodies and major public sector agencies. UPSF offers three main services to their members: policy advocacy, trade development and membership services (including training, mentorship programs and networking events). PriceWaterCoopers & Hamburg Institute of International Economics. (2009).Aid for Trade: making trade effective for development. Case Studies for Kenya, Tanzania and Uganda. Germany: Braun & Sohn Druckerei und Werbeproduktions GmbH., p.66 50 OECD/WTO. (2013). Aid for Trade in Action. OECD Publication., p.81 51 ODI (2010). Uganda Case Study for the MDG Gap Task Force Report. London: ODI., p.38 52 The EIF are international programmes to build capacity for formulating and implementing trade policy. Ibid., pp.69-70 53 EU (2012). Making Business with EU. Trade, Growth and Jobs. EU 54 Deere, Carolyn. 2005. "International Trade Technical Assistance and Capacity Building." In 2005 HDR., p.145 55 See http://www.who.int/mediacentre/factsheets/fs094/en/ retrieved on 29th September, 2014 56 WTO (2009). The WTO and Millennium Development Goals. Geneva: WTO., p.9 57 We agree that the TRIPS Agreement does not and should not prevent Members from taking measures to protect public health. Accordingly, while reiterating our commitments to the TRIPS Agreement, we affirm that the Agreement can and should be interpreted and implemented in a manner supportive of WTO Members'right to protect public health and, in particular, to promote access to medicines for all Hoen, E. F. M. (2003). TRIPS, Pharmaceutical Patents and Access to Essential Medicines: Seattle, Doha and Beyond. See http://www.who.int/intellectualproperty/topics/ip/tHoen.pdf., p.52 Retrieved on 6th October, 2014 58 See http://www.wto.org/english/tratop_e/trips_e/public_health_faq_e.htm., Retrieved on 6th October, 2014 59 Hoen, E. F. M., (2003). TRIPS, Pharmaceutical Patents and Access to Essential Medicines: Seattle, Doha and Beyond. See http://www.who.int/intellectualproperty/topics/ip/tHoen.pdf.,pp.42-43 Retrieved on 6th October, 2014 60 Global Commission on HIV/AIDS and the Law. (2011). Intellectual Property Rights and the Access to Medicines. A Regional Brief for Africa. UNDP.,p.13 61 Mhamba, R. M., and Mbirigenda S., `The drugs industry and access to essential medicines in Tanzania' (EQUINET Discussion Paper Series 83, 2010) Training and Research Support Centre, SEATINI, Rhodes University, EQUINET: Harare 62 Hoen, E. F. M. (2003). TRIPS, Pharmaceutical Patents and Access to Essential Medicines: Seattle, Doha and Beyond. See http://www.who.int/intellectualproperty/topics/ip/tHoen.pdf., p.42 Retrieved on 6th October, 2014 63 Khor, M., (ed). (2001). The Multilateral Trading System. A development Perspective. A paper for UNDP. Penang: TWN 64 Khor, M., (2002). Developing a Global Partnership for Development: Critical Issues and Proposals for Trade and Finance. Penang: TWN.,p.1 65 Hoekman, B., Mattoo, A. & English, P. (eds). (2002). Development, Trade, and the WTO. Washington: IBRD/World Bank.,p.73 66Ibid., p.72 67 Ibid.,p.1 68Khor, M., (2005) Implications of some WTO rules on the realization of the MDGs. Penang:TWN 69 Ibid. 70 Khor, M., (2002), op. cit. 71 Khor, M., (2005). Implications of some WTO rules on the realization of the MDGs. Penang:TWN.,p.5 72 Hoekman, B., Mattoo, A. & English, P. (eds). (2002). Development, Trade, and the WTO. Washington: IBRD/World Bank.,p.103 73 All domestic support measures considered to distort production and trade (with some exceptions) fall into the amber box, which is defined in Article 6 of the Agriculture Agreement as all domestic supports. These include measures to support prices, or subsidies directly related to production quantities. Any support that would normally be in the amber box, is placed in the blue box if the support also requires farmers to limit production. he green box is defined in Annex 2 of the Agriculture Agreement. In order to qualify, green box subsidies must not distort trade, or at most cause minimal distortion. See http://www.wto.org/english/tratop_e/agric_e/agboxes_e.htm., Retrieved on 24th October, 2014 76
University of Ghana http://ugspace.ug.edu.gh 74 Ibid.,pp.6-7 75 Khor, M., (2005), op. cit.,p.6 76 Khor, M., (ed). (2001op.cit., pp.65-66 77 UNDP. (2003). Making Trade work for People. London: Earthscan Publications.,pp.261-275 77
University of Ghana http://ugspace.ug.edu.gh CHAPTER FOUR SUMMARY OF FINDINGS, CONCLUSION AND RECOMMENDATIONS 4.0 Introduction The study sought to examine whether a successful conclusion of the Doha Round of negotiations would result in the socio-economic development of African countries. It also discussed some contributions of the WTO to the realization of MDG 8 in Africa as well as the implications of some WTO rules and agreements. The study proceeded on the hypothesis that the WTO is playing a major role in achieving the MDG 8 in Africa. This chapter therefore gives a summary of findings of the study, conclusion and recommendations 4.1 Summary of Findings With the establishment of the MDGs, the global community agreed that for DCs and LDCs to achieve the goals, there was the need to help them develop, thus, the MDG 8 was instituted. The MDG 8 outlines the means through which DCs and LDCs could develop and they include trade, debt sustainability, aid, access to medicines and technology. The introduction of trade, as a means of achieving development in Africa and other DCs, only establishes the impact fair and free trade could have on the development of countries. As the main multilateral trading organization, the role of the WTO in achieving this cannot be overlooked. In a very fundamental sense, the WTO helps create the conditions for trade to deliver economic growth. This is not just a theoretical proposition, but one where results can be seen in the growth patterns of countries that have adopted open-trade policies. 78
University of Ghana http://ugspace.ug.edu.gh African countries have long been victims of persistent trade imbalances, which have largely affected its gains from trade. As a result, the WTO launched the Doha Development Agenda (DDA) to solve such imbalances and also ensure African countries and other DCs as well as LDCs develop through trade. Although current stalled, the study found out that a successful conclusion of the DDA could have significant effect on human development as well as development of African countries. As African countries acquire increased access to markets of developed countries, the development would be evident in amount of income realized, increased job opportunities, access to technology as well as increased access to essential and affordable medicines. This would also improve rural livelihoods. Meanwhile, the collapse of the DDA does not curtail the role of the WTO in helping achieve the MDG 8. This is because as part of its roles, the WTO has ensured the participation of DCs and LDCs in the trading system through the provision of trade preferences by advanced countries. This has increased market access for DCs and LDCs. However, strict rules of origin governing these trade preferences, especially the European Union's "Everything but Arms (EBA) initiative, only allows for raw materials since manufacturing industries in Africa acquire intermediate products outside the region in order to make its final products. This has killed manufacturing industries in Africa and creating increased unemployment. Furthermore, even though advanced countries have reduced tariffs, they now resort to non-tariff measures to curtail market access for DCs and LDCs. 79
University of Ghana http://ugspace.ug.edu.gh The WTO has also encouraged Aid for Trade (AfT) initiatives in the region. The AfT has helped build trade capacities in the region to allow DCs and LDCs take advantage of trade opportunities. The initiative has enhanced infrastructure, institutions and has also equipped trade experts with requisite skills to help expand production and increase supply in the region. This has helped increase revenue, incomes and also created employment opportunities. However, the initiative is mostly donor-driven. Donors invest only in areas of their interests rather than those that would facilitate the development of African countries. With respect to access to essential and affordable medicines, the WTO has made the issue of public health a priority in the TRIPS Agreement. It has granted flexibilities to DCs and LDCs to help them acquire access to affordable medicines. Meanwhile inadequate funding has resulted in the flow of low quality drugs into the region. The region has also failed to take advantages of such flexibilities due lack of logistics and storage problems. The study also found out that although increased liberalization of trade could be beneficial to African economies, some WTO rules rather curtail development in Africa. For instance, liberalizing basic services like water, health and other social needs could make them very expensive for individuals in Africa. The TRIPS Agreement has also increased the cost of technology transfer. This would affect the development of African economies. 4.2 Conclusion Given the findings of the study, it is imperative to accept the hypothesis that the WTO is playing a role in the achievement of MDG 8 in Africa. However, it is also necessary for the WTO to 80
University of Ghana http://ugspace.ug.edu.gh address the imbalances in the MTS which puts DCs and LDCs in Africa at a disadvantage. This is because the study has proved that although the WTO is helping DCs to exploit market access opportunities, unilateral decisions as well as persistent trade imbalances in developed countries have largely limited trade benefits necessary for the development of African Countries. In other instance, Africa has itself failed to exploit such opportunities. Data provided in the chapter one shows how Africa rely on international trade to address the balance of payments problems and other development challenges. Thus, effective working of the WTO would hasten the realization the MDG 8. Given the findings of the study, the actual proceedings of the WTO debunk the assumptions of the neoliberal school of thought concerning the International Regime theory. According to the neoliberals, regimes are means through which states realize their common interests. They believe states are rational egoists interested in absolute gains. In reality, the process within the WTO is one of achieving relative gains as posited by the structural realists. The deadlock of the current DDA is due to lack of cooperation, which the neoliberals believe should prod states to realize absolute interest in regimes. Advanced countries within the WTO are interested in their independent interests, which include protecting their domestic producers and industries as well as improving on their relative gains in the midst of the current global economic crisis. The study also supported the existing literature. However, it addressed the gap within the existing literature. This is because, the study identified the failures of DCs themselves to exploit the opportunities granted them by the WTO. Most African countries lack domestic strategies to exploit trade advantages. In responding to the objectives of the study, it is observed that even 81
University of Ghana http://ugspace.ug.edu.gh though the contributions of the WTO to the achievement of the MDG 8 cannot be underestimated, its rules and agreements have generally benefitted the advanced countries. However, a successful conclusion of the DDA would exert important influence to the realization of the MDG 8. 4.3 Recommendations A rapid conclusion of the Doha Round can go a long way in realizing MDG 8. The further opening of markets and the further strengthening of global trade rules that will come about will contribute in a fundamentally important way to the long-term health of the global economy and to the development aspirations of developing countries. The WTO needs to evolve more inclusive, participatory and transparent methods of discussion and decision-making, in which all members are fully enabled to participate and make proposals. Decision-making procedures and practices that are non-transparent and non-inclusive, especially before and during Ministerial Conferences, should be discontinued. The WTO secretariat should also be impartial and seen to be impartial. In particular it should not be seen to be taking sides with the more powerful countries at the expense of the interests of developing countries. The system must reflect the fact that the majority of members are developing countries and must provide them with adequate means and with appropriate procedures to enable them to voice their interests and exercise their rights. Further, citizen groups must be allowed to follow developments in the WTO and channels opened to make their views better heard. 82
University of Ghana http://ugspace.ug.edu.gh In reaching the MDG 8, the enforcement mechanisms of the WTO is worth revising. Advanced countries have normally fraught agreements and rules of the WTO due to the laxity in its enforcement mechanism. Thus, the WTO should put in strong punitive measures in order to ensure transparent, fair and open MTS. 83
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University of Ghana http://ugspace.ug.edu.gh VanGrasstek, C., (2013). The History and Future of the World Trade Organization. Geneva: Zedillo, E., Messerlin, P. & Nielson, H., (2005), Trade for Development: Achieving the Millennium Development Goals. London: Earthscan. 87

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