Global civil society says no to binding rules on Trade Facilitation in WTO, FTAs and EPAs

Thursday 13 June 2013

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Document type: Releases and statements

Language: English

Theme: civil society and world trade organisation

Keywords: trade, civil society, wto, economic partnership agreement

Countries and regions: International

We, the undersigned civil society organizations, representing hundreds of millions of members across the globe, urge you to abandon the negotiations towards a binding agreement on Trade Facilitation in advance of the upcoming 9th Ministerial meeting of the World Trade Organization (WTO) in Bali. Binding rules on Trade Facilitation should not be promoted either inside the WTO through the proposed Trade Facilitation (TF) agreement, nor through other avenues such as bilateral or regional Free Trade Agreements (FTAs) or Economic Partnership Agreements (EPAs). Developing countries should have the policy space to adopt, at their discretion, higher levels or standards and customs–related procedures as and when capacity exists to do so, taking into account their development context.

No empirical evidence of benefits to developing countries: Proponents of the TF negotiations have argued that developing countries would benefit even more than developed countries from an agreement on Trade Facilitation. However, there is little empirical basis for this claim. Quite the contrary, the proposed binding agreement on Trade Facilitation is a key demand of the developed countries towards the Ministerial, because it will serve the interests of their corporations.

Better call it an “import-facilitating agreement”: A binding agreement on Trade Facilitation in the WTO would require developing countries to implement a set of rules reflective of the current trade facilitation practices of the developed countries. They would not address the urgent need to expand the productive and export capacities of the developing countries. Thus, while imports into developing countries would be facilitated by the new rules, it is difficult to imagine how exports from developing countries could be similarly facilitated. In fact, Trade Facilitation rules in the WTO should be more accurately called “import-facilitating rules” for developing countries. Hence, a TF agreement would likely result in the further worsening of the trade balance in many developing countries, leading to balance of payment problems that often further increase indebtedness.

A corporate-driven model: The proposed agreement on Trade Facilitation follows a model of corporate-driven globalization focused on increasing the volume of trade, rather than achieving globally-shared development goals through rules that facilitate countries’ use of trade policy for their own development needs, and in accordance with their levels of development. In fact, a Trade Facilitation agreement at the WTO would create new markets – in customs and shipment processing for multinational corporations. At the same time, it would likely lead to the further privatization of ports, customs operations, and shipment processing, which leaves little or no space for local operators, and which has already led to a loss of jobs, downward pressure on wages, and erosion of labor rights for public workers in these sectors. A TF agreement would increase trade, which is a significant source of carbon emissions that contribute to global climate change.

Costs un-accounted for: While developed countries promote the proposed agreement as a “win-win,” most of the costs of a TF agreement to developing countries are rarely included in projected impact assessments. For example, there are significant implementation, regulatory, human resources, and infrastructure costs associated with the proposed Trade Facilitation agreement, many of which are recurring, and would be siphoned from national budgets, diverting available resources from development needs.

Loss of budget support for development priorities: A potential Trade Facilitation deal is also expected to lead to irreplaceable loss of tariff revenue. Compared to developed countries, the share of customs revenue in the total tax collection is much higher in developing countries and Least Developed Countries (LDCs). Foregone tariff revenue would have serious implications for national budgetary support for key development issues such as education, health, and poverty reduction. Reducing national budget support for addressing the Millennium Development Goals can in no way be referred to as a pro-development outcome.

Encroaching upon national regulatory and policy space: In addition, the provisions of the proposed Trade Facilitation agreement, as they are being negotiated, would undermine the regulatory capacities of developing countries. The proposed rules would expand the opportunities of multinational corporations to lobby in national and local legislative processes. Furthermore, the rules that would be enforced through a TF agreement would provide ample grounds for challenging regulations, laws, and procedures in member states.

Eroding the rights of developing countries and LDCs: Further eroding any claim to benefits for developing countries is the fact that there remain significant imbalances and incoherence within the text being negotiated. The new Trade Facilitation rules, being pushed by developed countries, have advanced significantly, and are set in binding language. Negotiations on Technical Assistance and Capacity Building, which are central to the original agreed Trade Facilitation negotiations mandate (2004), have been stalled by developed countries, and are currently framed in non-binding language.

The needs-assessment exercises of developing countries are likewise being utilized as a ‘compliance assessment’ tool in order to pressure developing countries into accepting the Trade Facilitation agreement rather than to encourage developed countries to increase their technical, and particularly financial assistance.

A WTO Trade Facilitation Agreement differs from unilateral and voluntary processes: Developing countries can benefit from more efficient and transparent trade procedures. But unilateral voluntary implementation of non-binding customs-related guidelines, and/or the Revised Kyoto Convention of the World Customs Organization, in accordance with national priorities and needs, is of a different nature and brings different implications compared to a binding TF agreement that could be enforced through the Dispute Settlement procedures of the WTO. Worse, the latter could lead to sectoral cross-retaliation among countries, the effects of which are expected to be more pernicious to the much smaller economies of developing countries and least developed countries.

What we need to see being advanced: Instead, any discussions at the WTO should focus on rectifying historical imbalances and asymmetries in the WTO, in order to provide more policy space for countries to implement solutions to the global economic crises. A starting point would be agreeing to the important proposal of the “G33”group of 46 developing countries to allow developing countries to promote domestic Food Security, and delivering on the LDC package at the upcoming Ministerial. In addition, a real advancement on the Special and Differential Treatment (SDT) and Implementation Agenda issues, long advocated for by developing countries, is long overdue. The WTO Turnaround Agenda of the Our World Is Not For Sale (OWINFS) network also provides an outline of such needed policy changes, which are essential to start the process of transforming the global trade system into one that works for sustainable and inclusive development for all.

Sincerely,

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