Hong Kong Declaration: Further betrayal of people and the environment

Au Loong Yu

The WTO Doha Round began in 2001. Despite experiencing temporary failure in 2003, partial progress within the Doha agenda was made during the Hong Kong Ministerial Conference in December 2005 that may pave the way for full agreement in 2006.

The unfair Agreement on Agriculture (AoA)

The strongest illustration of the deceptive small carrots contained in the Hong Kong declaration was the elimination of agricultural export subsidies in 2013[1]. Expenditure on agricultural export subsidies in the EU over shadowed domestic subsidies. According to the AoA, domestic support on agriculture was supposed to be subject to gradual reduction as well, in order to achieve free trade in agricultural products. However in the Doha Round, from the 2001 ministerial statement to the present Hong Kong Declaration, developed countries have never cared to live up to their promise. Despite the rhetoric, a timeline for cuts to domestic subsidies has never been scheduled. Once again the hypocrisy of rich countries in their promotion of free trade is exposed.

The AoA has been an unfair agreement since the very beginning. Not only did it require rich countries to reduce subsidies, but developing countries as well, except for a handful of LDCs. In the period of 1986-88, domestic agricultural subsidies in the EU reached 92.39 billion USD, while Costa Rica only provided 18 million USD. If the AoA was really a reasonable agreement for developing countries, it would have required the EU to substantially cut its domestic subsidies while allowing the latter to keep its subsidies intact. However, according to the AoA, both developed and developing countries had to reduce their subsidies by 17% and 13% respectively, calculated on the base figure of the 1986-88 period! For the EU, since the base figure of its subsidies was large, subsidies remained huge even after cutting 17%. On the contrary, the base figure of Costa Rica was so tiny that even though the 13% reduction was smaller than the EU, the losses amounted were significantly more substantial. Similar losses were incurred by other developing countries. This kind of one size fits all reduction is actually a policy that marginalizes the weak.

Agriculture in advanced countries today would not have developed as it has, if it were not for decades worth of state subsidies. For a long time after the Second World War, Western Europe was a net importer of agricultural products. It was not until the 1980s that it turned into a net exporter. Only after the Western European countries used subsidies to develop their agriculture to an advanced stage, did they begin to promote the myth of “free trade” in agricultural products, at which point promoting the reduction of subsidies in developing countries if developed countries did the same. Thus, poor countries were deprived the portion of their economic sovereignty that enables them to provide subsidies in order to protect small peasants. It was clear that the AoA would not benefit poor countries. What is worse, developed countries had few incentives to right the wrongs in the AoA, and rather only twisted it further in the direction of their own interests.

NAMA: Oceans and forests for sale under the WTO

The HK Declaration officially inaugurated the opening of negotiation on NAMA (Non-Agricultural Market Access). This inauguration marked further expansion in the WTO’s area of control. The GATT (General Agreement on Tariff and Trade) was significantly different from the WTO, in that the former governed a much smaller scope. It did not include agricultural products, fibre and services. The WTO started to include these areas when it was founded in 1995. However, the advanced countries were not satisfied with this alone. They made a proposal to abolish export subsidies in agriculture with the intent of using it as a bargaining chip to force developing countries to further open up their markets. Therefore they pushed for NAMA negotiations. According to the Doha ministerial declaration at 2001, under Non-Agricultural Market Access, “product coverage shall be comprehensive and without a priori exclusions” (article 16). The HK declaration pointed out that NAMA may include fishing, logging and raw materials, particularly precious metals.

NAMA negotiations thus subject 350 million peasants and indigenous people – whose livelihoods are dependent on the forest – as well as 40 million small fisher folks, into the jurisdiction of the WTO framework. Their livelihoods are thus transformed into mere commodities, bought and sold by transnational corporations (TNCs). Small farmers and fishers the world over know all too well the implications if one’s livelihood falls under the jurisdiction of the WTO. It was without surprise that so many fisher folk groups participated in protests during Hong Kong’s WTO ministerial conference, chanting slogans such as, “Keep WTO out of fishing.”

NAMA:The danger of de-industrialization for developing countries

NAMA negotiations have come under fire by NGOs of developing countries, for the fact that the economic sovereignty of developing countries to use tariffs to protect their home industries is further restricted. Additionally, the Declaration employed the Swiss formula. Developing countries view this formula as unfair because the rate of tariff deduction for them will be higher than for the advanced countries. These two aspects of NAMA make the development of national industries in developing countries more difficult.

If the Doha Round were really a development round, then there would have been an effective mechanism to address this unfair regime. The round would have required the advanced countries to abolish those tariff systems that hinder indigenous industrialization in developing countries. At the same time, developing countries would not be forced to reduce their tariffs. Developing countries do not always need high tariffs, but they do need sovereignty on tariff decisions. Tariffs are important tools for growth. In fact, advanced countries used tariffs to expand their own home-grown industries. However NAMA functions in the opposite way.

Trade of services: A project of privatization

In this negotiation, advanced countries had another hidden agenda: pushing through a further commitment in GATS and changing the trade rules. According to GATS, each country originally had the sovereignty to decide whether or not to enter negotiation on opening up their service market. Though the advanced countries failed to get all they had wanted during the Hong Kong ministerial meeting, they nevertheless pushed forward part of their agenda through the Hong Kong Declaration by changing bilateral negotiation to multilateral negotiation. In the past, each country would negotiate directly with each other country on services. With the emergence of the Hong Kong Declaration, a couple of countries that have the same interest can now come together and put collective pressure on a poor country to enter into negotiation. Since many poor countries are indebted to the EU and US, they will be doubly hard pressed by rich countries in multilateral negotiation.

Furthermore, Annex C requires that all member states “should be guided, to the maximum extent possible...... in making their new and improved commitments” to further liberalize trade in the four modes of supply in services. Particular attention will be on foreign investment and the cross border mobility of staff in these foreign firms. We are very concerned that if the WTO were to succeed in modes’ negotiation the benefits of the people and the environment would be further sacrificed. The 18 agreements within the WTO, in practice, target all laws that defend environmental and human rights, including the specific rights of women and workers, and treat them as trade barriers. These standards become much more vulnerable to attack by TNCs. The so-called mode 4 of supply in services was actually tailor-made for TNCs to bring cheap labour, or even cheap professionals, from developing countries to the advanced countries while retaining the low wages of the developing countries. To conclude, if the WTO succeeds in liberalizing global services trade, TNCs will then enjoy full freedom in trade and investment, to the effect that they are no longer subjected to any democratic control at all. The only freedom in this situation is the free exploitation of the environment and labour by TNCs, without any constraint whatsoever. Today, the WTO has not yet fully succeeded in its agenda. However, if the public does not stand up to oppose the WTO, this disastrous scenario will soon come.

The so-called service sector includes many different public sectors: water, education, medical service, elderly care and postal service are only a few examples under this category. Put simply, privatization of public services under GATS prepares the way for foreign companies to purchase important public assets.

The Hong Kong Declaration laid out the direction of negotiations and presented a timetable for GATS negotiation.

  • Groups of Members presenting plurilateral requests to other Members should submit such requests by 28 Feb 2006 or as soon as possible thereafter.
  • A second round of revised offers shall be submitted by 31 July 2006.
  • Final draft schedules of commitments shall be submitted by 31 Oct 2006.

Since the Hong Kong government has already offered environmental services and library services to some of the WTO member states, an agreement may be achieved by the end of next year, according to the timetable mentioned above. Therefore, the social movement in HK must try to stop the government’s offer, which amounts to putting on sale those public services currently provided by the Food, Environmental and Hygienic Department, the Environmental Protection Department, the Sewage Department and the Cultural and Recreational Department etc.

The role of China

The most important reason allowing the Hong Kong ministerial conference to move “forward” from the initial Doha round was the betrayal of big developing countries like China, India and Brazil, which headed the G20. They compromised with the EU and US by sacrificing the interests of small developing countries. It becomes obvious now that the resistance of China, India, and Brazil against the advanced countries agenda during the Cancun conference in 2003 was only due to the fact that the developed countries were far too ambitious at that time. Once the latter watered down a small portion of their agenda, the three big developing countries found it beneficial to no longer resist and thus concluded the Hong Kong Conference.

The position of the Chinese government was very clear: it would fully accept the Doha agenda – especially NAMA and GATS – as soon as developed countries gave out token concessions to the developing countries to sweeten their pill. Mr. Bo Xi Lai, the Minister of Commerce and Trade of China, repeated the appeal from Mr. Hu Jin Tao, the president of China, which stated that “all related parties should give the strongest political will, show necessary flexibility, and actively promote the Doha development round’s negotiation. It is the only way we can reach substantial achievement in the Hong Kong conference.” The China delegation participated in all green room negotiations, which were only open to advanced countries and a few privileged developing countries. Most developing countries were left outside. Feng Jun, a representative from the Chinese delegation, expressed that other developing countries had high expectations of China to stand up in defense of their interests. Surely, China disappointed them. Bo Xi Lai clearly said that “China enjoy[s] comparative advantages in low to medium end products. Therefore, China hope[s] to develop [a] new market for herself.”

Regardless of the success or failure of China’s agenda, the truth remains that common peasants and workers have not benefited from growth in trade and economy. On the contrary, in order to enter the WTO China restructured her industry and privatized her public service. As a result millions of people lost their jobs. For the same reason, the Chinese government also sacrificed the peasants. Agricultural tariffs were reduced to one of the lowest in the world. Moreover, China voluntarily reduced domestic agricultural subsidies from 10% to 8.5%. All of the above measures compound the impact of imported cereal products and lead to the destruction of the future small peasants economy. Recently, China became a net importer of agricultural products. This is quite alarming for a big country like China. Government officials respond, however, that this shift promotes more commercial farming and export-oriented agriculture. This policy merely reinforces the regime of “survival of the fittest” within the international trade system. However this system is not sustainable, from either a social or an environmental perspective.

All in all, the WTO is only a tool of monetary power. Monetary power does not have any sympathy towards human beings. If we could not be certain of this in the past, the present Hong Kong Declaration should make it clear enough.

[1] Providing tariff free and quota free market access to LDCs was another concession by developed countries. But we are only talking about 50 small countries whose economic weight accounts for less than 1% of the world total.