Gearing up for Cancun

A draft statement that reflects the interests of the industrialised world and ignores many areas of Third World concern forces developing nations into a corner, ahead of the Ministerial meet in September.

THE Union Ministry of Commerce recently began a series of consultations with chambers of commerce, farm organisations, trade unions and various professional associations, on the negotiating stance that India should adopt at the Cancun Ministerial Meeting of the World Trade Organisation (WTO) in September.

Meanwhile, a mini-ministerial meeting of the body, comprising 25 key member-countries, broke up inconclusively in Montreal, Canada. If there are any breakthroughs on the road to Cancun, they are being reserved for maximum dramatic impact. In the complicated bundle of interlocked agreements, no one country wants to yield on an issue in which it has vital stakes, without an assurance that it will be more than compensated elsewhere.

True to form, developing countries have been locked into the reactive mode. Unable to formulate a mutually agreed position that would enhance their collective bargaining power, they have been reduced to pointing out what are the more and less objectionable features in the package of proposals brought to the table by the industrialised nations.

At a two-day conference in New Delhi, held under the banner of the Indian Peoples' Campaign against the WTO, various speakers drew attention to the basic infirmity of the strategy. S.P. Shukla, a former Ambassador to WTO's predecessor body, the General Agreement on Tariffs and Trade, criticised the Indian approach as inadequate and self-defeating. A draft Ministerial statement, full of empty boxes, which reflect the many areas of ambiguity and disagreement, has been in play since mid-July. Although it leaves a great deal for resolution at Cancun and in the few weeks preceding, its architecture and substance are reflective of the interests of the industrialised world. Many areas of concern to developing countries have either been omitted or passed over with a ritualistic reference.

A pragmatic reading of the WTO's career would suggest that it is a forum that affords developing countries few options other than subtle defensive manoeuvring. Built around the economic interests of the so-called "Quad" - the United States (U.S.), the European Union (E.U.), Japan and Canada - the WTO relegates developing countries to the desperate pursuit of advantage in the interstitial spaces. But speakers at the conference convened by Shukla were convinced that the defensive options had largely been exhausted. What India and other developing countries needed to do was portray the agenda of "standstill and rollback" as a positive agenda. In other words, the refusal to accept further trade liberalisation obligations and the insistence on reversing the more adverse provisions of existing agreements needed to be cast within the framework of a development agenda.

The last WTO Ministerial meeting at Doha made a verbal concession to the developing world by labelling the negotiations it inaugurated as the "Doha Development Agenda", rather than a "trade round". But little in what has followed has lent any substance to this appellation. Crucial deadlines have been missed in the areas of agriculture, patents and public health, and special and differential (S&D) treatment for developing countries. There is little assurance of any progress in the weeks prior to Cancun either.

In the run-up to the Seattle Ministerial fiasco of 1999, developing countries had listed 95 issues in which implementation of existing agreements had been inadequate or skewed against their interests. When WTO deliberations were restored to a semblance of sanity at Doha, the then Director-General, Mike Moore, announced with a flourish that a consensus had been forged on the legitimacy of developing countries' case. All implementation issues, he vowed, would be considered as part of the new round of multilateral trade negotiations. And as a gesture of its seriousness, the WTO posted a list of 40 areas in which implementation decisions had been made for immediate delivery after Doha.

Subsequent events showed that the promises on implementation were vacuous or worse. As an example, developing countries were promised an acceleration of the dismantling of quotas on textile exports for immediate delivery after Doha. The deadline was then shifted to July 31, 2002. Extensive consultations within the WTO's Council on Trade in Goods, produced nothing. A proposal to present the case to the General Council without any specific recommendations, failed to take off, as members could not agree on the phrasing that would best characterise the rival positions.

The Doha Ministerial declaration had similarly affirmed that S&D provisions were "an integral part of the WTO agreements", vowing to explore ways to make them "more precise, effective and operational". Working on this mandate, the Council on Trade and Development was due to report to the General Council by July 31, 2002, with "clear recommendations for a decision". The deadline was then extended to December 31 and subsequently to February 10, 2003. But member-countries remain as deeply divided as ever. Industrialised nations are averse to any concessions that would benefit the entire developing world. They could concede a certain degree of latitude to the least developed countries, which are categorised in accordance with United Nations' norms. But any collective right that is yielded to "developing countries" seemingly stokes extreme paranoia, that it would be the first step towards enshrining two sets of rights and obligations within the WTO.

Under the "single undertaking" clause of the WTO, which is applicable to the Doha Round, all areas have to be negotiated and agreed simultaneously. A multiplicity of issues face serious deadlocks and the key breakthrough, as with previous rounds of negotiations, could lie in shaking one piece free, which in turn could clear the entire logjam.

Now, there are powerful indications that the U.S. could undergo a conversion on the road to Cancun and embrace a draft text on public health and patents that has been in play since December. Shortly after the Montreal mini-Ministerial, Mexico's Ambassador to the WTO Eduardo Perez Motta indicated - without naming the U.S. - that agreement on this vital area was within reach.

The impediments that the stringent agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS) placed on public health delivery were one of the most contentious issues at Doha. Delegates had then agreed upon a text, the Declaration on TRIPS and Public Health, which affirmed that the agreement did not and should not prevent member-countries from taking measures to protect public health.

Beyond this bare statement, the TRIPS Council of the WTO has struggled to operationalise the actual rights and obligations involved. After much futile debate, the field today is held by a draft agreement introduced by Motta in his capacity as chair of the TRIPS Council. The Motta text takes its cue from the first paragraph of the Doha declaration, which mentions as an illustration a list of diseases that should be provided for, HIV/AIDS, malaria and tuberculosis. Although the Doha declaration had no such intent, the Motta text, without explicitly saying so, seems to narrow the special provisions of the agreement on TRIPS and public health to these specific diseases.

The U.S. gave a crucial hint of its negotiating strategy in December, shortly after the Motta text was drafted. While publicly repudiating the formula, the U.S. rather ostentiously declared a unilateral moratorium on challenges to any country "that breaks WTO rules to export drugs produced under compulsory licence to a country in need". However, this voluntary restraint would be confined to HIV/AIDS, malaria, tuberculosis and other infectious epidemics - phrasing identical to that used in the Doha declaration on TRIPS and public health. And the moratorium would not be applicable to industrialised countries or middle-income developing countries.

The Motta text does not follow the criteria of eligibility that the U.S. has implicitly embraced, but it comes close. Without any qualification, it allows the use of special provisions of drug importation to meet essential public health needs for the "least developed countries". It then notes that several countries, which happen not entirely by coincidence to be developed countries, have indicated that they will not seek recourse to the special provisions as importing countries. Yet another group of countries, this time not explicitly identified, it notes, have indicated that they will use the provisions for imports only in situations of "national emergency" or "other circumstances of extreme urgency". And, as a further precaution, the eligibility of such a country to import drugs produced elsewhere under compulsory licensing, would need to be adjudged by an empowered body of the WTO. The country would need to establish credibly that it lacks the manufacturing capacity to produce the medicines on its own.

These provisions are remarkably congenial to the U.S.' preferred interpretation of the declaration on TRIPS and public health. And for good measure, the Motta text provides for stringent rules to ensure that cheap generic drugs imported into any country lacking the manufacturing capacity, are not diverted to third countries. Each situation requiring import would have to be specifically examined and the names and required quantities of medicines required would have to be specified. The country that is granted the compulsory licence to produce the drug would then have to suitably publicise suitably the quantities being supplied to each destination, and specify the "distinguishing features" of each consignment to ensure there is no diversion.

All this amounts to a serious attenuation of the rights that the declaration on TRIPS and public health was supposed to enshrine. The Motta text represents a serious capitulation by developing countries that had argued that they would accept no narrowing of the scope of the provisions in terms of disease-specificity. And the net effect of the proposed agreement would be to render the procedures of granting and executing a compulsory licence so complex as to make it a virtual dead letter.

But with this pretence of an agreement on TRIPS and public health, a multitude of possibilities could open up for the industrialised countries. The U.S. for instance, could shift its substantial weight more firmly behind the E.U. insistence on a multilateral agreement on investment. In return, it could ask for firm commitments from the E.U. to curtail its bloated farm subsidies and cutting import duties on agricultural products. Developing countries, which have been looking for concrete signs of progress on implementation issues and S&D provisions, could well find themselves short-changed in the process. The only mitigating circumstance for them would be that Cancun is not designated as the culmination of the new trade round, but merely as a guidepost to the final agreement due by January 2005. Developing countries may yet have much to fight for in the months following Cancun.