Comments Off on South Centre Welcomes WTO Decision on LDCs and TRIPs
The Council on Trade-Related Aspects of Intellectual Property Rights (TRIPS) of the WTO on 11 June adopted a Decision to extend the time period for the least developed countries to implement the TRIPS Agreement. This means that the LDCs are not obliged to implement many of the provisions of the agreement for another eight years, after the expiry of the past implementation period on 1 July 2013. Although the Decision fell short of the request made by the LDC Group, it was nevertheless seen as a success for the LDC Group which undertook lengthy and difficult negotiations on this issue with developed countries. Below is a statement of the South Centre welcoming the Decision.
The South Centre welcomes the decision of the TRIPS Council of WTO on 11 June 2013 to allow Least Developed Countries to delay implementation of the TRIPS Agreement until 1 July 2021. At the end of this period, LDCs can request further extension.
The TRIPS Agreement (Art. 66.1) states that in view of the special needs and requirements of LDCs, their economic, financial and administrative constraints, and their need for flexibility to create a viable technological base, LDCs shall not be required to apply the provisions of the agreement, for a period that can be extended by the TRIPS Council, upon duly motivated request by an LDC.
The terms of the 11 June 2013 decision this time are better than the terms in the previous extension, granted in 2005. This is mainly due to the determination and skill of the LDC Group, led by Nepal, during the long negotiations lasting for months, which the LDC Group engaged in with the major developed country members of the WTO. Developing countries were fully supportive of the LDC Group request, as were many civil society groups around the world. However, the LDC Group’s request was unfortunately not acceptable to many of the developed country members of the WTO.
The new extension period is for eight years, starting on 1 July 2013. This is longer than the seven and a half years transition period provided in the 2005 decision. It is thus an improvement, though very slight. It is also significantly below what the LDC Group had asked for in its formal proposal IP/C/W/583, in which the Group had requested that the transition period should last so long as the country remains an LDC. This request was justified, especially since the relevant part of the TRIPS Agreement (Article 66.1) states that the TRIPS Council shall grant LDCs further extension of the transition period, upon due request. In the view of the South Centre, LDCs have a low level of economic and social development and thus require time to develop a viable technological base and to experiment with domestic IP legislation before being obliged to implement the TRIPS Agreement. The economic condition of LDCs as a group has not improved in the past several years, especially because of the global financial crisis of 2007-09 and the global economic slowdown.
The 11 June 2013 decision has also removed the condition introduced in the earlier 2005 decision that LDCs cannot roll-back the level of implementation of the TRIPS agreement that they have already undertaken in their national legislation. Under this condition, an LDC would not be able to experiment with IP-legal reforms that are suitable to their development context. For example, if an LDC introduces a TRIPS-compliant obligation on IP-protection, it would no longer be able to reduce that scope of protection, regardless of the fact that the LDC is not required to implement the TRIPS Agreement. This binding condition actually denied the policy space given to LDCs in the TRIPS Agreement to refrain from implementing the Agreement during the transition period.
This time, the LDC Group rightly insisted that any reference to a “no roll-back” binding commitment could not be included in the new decision. The LDC Group position was fully justified. However, some developed country members insisted on retaining the no roll-back commitment. As a compromise to the requests of developed countries, the new decision contains a sentence equivalent to a “best endeavour”, i.e. that LDCs express their determination to preserve and continue the progress towards implementation of the TRIPS Agreement”. This is not a binding commitment on LDCs and in no way can this be understood, in accordance with the interpretation principles applied in WTO, as preventing LDCs from rolling back IP legislation as required to meet their particular needs.
This gain in policy space is reinforced by the sentence immediately following, that “Nothing in this decision shall prevent least developed country Members from making full use of the flexibilities provided by the Agreement to address their needs….” In our view, this includes the flexibilities contained in Article 66.1 of the TRIPS Agreement (to not apply provisions of the TRIPS Agreement, other than Articles 3, 4 and 5), which has now been extended.
We also welcome paragraph 3 of the Decision, that LDCs have the right to seek further extensions of the transition period. This reaffirms the clause in Article 66.1 that the Council shall grant further extensions of the transition period upon due request by LDCs.
The 11 June 2013 decision provides assurance that LDCs retain their policy space and continue to have the full flexibilities intended by Article 66.1 to overcome their capacity constraints and develop a sound and viable technological base.
The best outcome would have been that the LDC Group’s request had been fully agreed to by the TRIPS Council. Nonetheless, given the circumstances, the 11 June 2013 decision to extend the transition period is to be welcomed as it is a gain for the LDCs.
The 11 June 2013 decision also states that this decision is without prejudice to the Council’s previous 27 June 2002 decision on “Extension of the Transition Period under Article 66.1 of the TRIPS Agreement for LDC Members for Certain Obligations with respect to Pharmaceutical Products” (IP/C/25). By way of the 2002 decision, LDCs are not required to provide protection to patents or test data in relation to pharmaceutical products, until 1 January 2016. Thus, LDCs should continue to make use of the policy space provided by the 2002 Decision.
LDCs should now receive full support from UN agencies, the WTO, WHO and WIPO, in the spirit of the Development Agenda, to make effective use of the transition period to build their technological base through technology transfer and capacity building, whilst making full use of the flexibilities afforded to the LDCs, including the further extension provided by the TRIPS Council on 11 June 2013.
Before the expiry of the transition periods, LDCs should again assess their situation and may request extension in 2016, with respect to pharmaceutical products, and in 2021 in respect to all provisions of the TRIPS Agreement.
This Statement by the South Centre is jointly authored by Martin Khor (Executive Director), Carlos Correa (Special Advisor, Trade and Intellectual Property Issues), German Velasquez (Special Advisor, Health and Development), Viviana Munoz Tellez (Manager, Innovation and Access to Knowledge Programme) and Nirmalya Syam (Programme Officer, IAKP).
Note:
The down-grading of the “no-rollback” clause from a binding commitment by LDCs to a best endeavour type effort can be seen in the texts on this issue in the 2005 decision and the 2013 decision.
The 2005 decision, Paragraph 5 stated: “Least-developed country Members will ensure that any changes in their laws, regulations and practice made during the additional transitional period do not result in a lesser degree of consistency with the provisions of the TRIPS Agreement.”
The 2013 decision, Paragraph 3 states: “…least developed country Members express their determination to preserve and continue the progress towards implementation of the TRIPS Agreement”. It adds: “Nothing in this decision shall prevent least developed country Members from making full use of the flexibilities provided by the Agreement to address their needs…..”
Comments Off on The man who saved millions with cheap medicines
His rivals called him a “pirate” but grateful millions whose lives were saved by his cheap generic medicines consider him a Robin Hood—Yusuf Hamied, leader of India’s giant company, Cipla.
I spent a day with a giant of a man who arguably has done more than anyone else to save millions of lives of people with AIDS and other diseases in the developing world.
The meeting took place in Mumbai at the headquarters of Cipla, one of India’s biggest generic drug companies.
Dr. Yusuf Hamied, the co-owner, managing director and leading personality of Cipla, is most unusual. Ideas and words flow from him like a mighty river, as he moves from one topic to another, his eyes twinkling.
This seems to come from the combination of a brilliant scientific mind (he has a PhD in Chemistry from Cambridge), a passion to overcome injustice and do good for the poor of the world, skills to turn ideas into practical results and the business imperative to make money at the same time.
Hamied is world famous as the major driving force in making high-quality HIV-AIDs antiretroviral medicines cheap enough that the poor in developing countries, especially in Africa, can access them.
In the process, he and a network of health activists and international organisations had to confront an entrenched system where a few drug multinationals, backed by patents, monopolised the AIDS medicines market.
Treatment used to cost US$12,000-15,000 per patient per year. Hamied combined three antiretrovirals into a single pill called triomune, making it easier and more effective for patients to take, and offered it at the rate of US$350 a patient a year.
That was in 2001 and his announcement caused acute anxiety for the drug multinationals who called him a “pirate” for offering a generic version of a combination of three patented medicines.
But he also evoked great excitement and hope among AIDs patients and their support groups around the world. To them he is a Robin Hood.
Back in 2001, only 4,000 Africans could afford the high-priced branded products. Last year, more than 8 million persons were using generic AIDS medicines, whose cost had gone down to around US$ 85 per patient per year, according to UN agencies.
Evidence shows many lives have been saved or prolonged due to the medicines, 80% of which come from Indian companies. But since there are almost 40 million worldwide suffering from AIDS, much more needs to be done.
Malaysians have also benefitted. I reminded Hamied that in 2003, Malaysia was the first country to issue a compulsory license, and it was for importing three AIDS drugs produced by Cipla. That slashed the price of the medicines the Health Ministry was buying, enabling more patients to be treated.
Hamied is now turning his attention to cancer. Last year CIPLA slashed prices of three generic anti-cancer drugs by up to 75%. “The time has come to do a similar thing — to provide affordable medicines for cancer, as we did for AIDS medicines,” he says.
In the case of one cancer drug, sorafenib, the original patented product by Bayer had cost 5,091 dollars (280,000 rupees) for a month’s treatment, way beyond the means of Indian patients. Another Indian company Natco obtained a compulsory license and sold its generic version for 160 dollars (8,800 rupees), while Cipla last year cut its own version’s price to 124 dollars (6,840 rupees).
Hamied is also on top of the latest scientific situation on other diseases, and seeking solutions.
When I asked him about the anticipated bird flu epidemic of a few years ago, about the spread of drug-resistant malaria, and the threat of multiple drug resistant tuberculosis, Hamied responded each time with his attempts, past and present, to make generic drugs available.
He gave me a scientific paper on a particular drug which he thinks is the best chance of tackling the deadly resistant forms of TB, indicating he is exploring how to produce it.
CIPLA now makes over 2,000 products, in 65 therapeutic categories, hires 20,000 people, has 34 manufacturing facilities, sells in 170 countries, and makes a healthy profit with annual sales exceeding US$ 1.4 billion.
It has made its mark as a champion of generics, fired with the nationalist and self-reliance spirit sparked by Mahatma Gandhi, who visited this same Cipla office in 1939. He requested the then owner, K.A. Hamied (Yusuf’s father), to initiate the local manufacture of medicines due to shortages caused by the onset of the war in Europe.
Hameid sees several looming problems that may cloud the future of the Indian industry. First is the 2005 introduction of product patents in India, in line with the WTO’s rules. Local companies now require a compulsory license (CL) from the government to produce generic versions of new medicines that are patented.
“It is a very cumbersome process to apply and get a CL for each patented medicine,” he says. “What is needed is a system of automatic compulsory license, with payment of 4% royalty to the patent owner.”
Canada and India had such a system in the past, and this should be revived, as India and other developing countries cannot afford to have monopolies and high prices in medicines.
Second are the free trade agreements which several developing countries including India are negotiating with Europe or the United States. Hamied points out that these FTAs contain clauses which would seriously hinder or stop the production and use of new generic medicines in those countries that sign the FTAs.
Third is the need to produce active pharmaceutical ingredients (APIs), which are the essential materials in the medicines. While many countries are able to make the finished products in the forms and dosages required, only a few developing countries (India and China principally) have the ability to make the APIs.
Hamied warns that India is already making less of the APIs that its industry needs, and an over-reliance on imports is developing. “If China and India don’t supply APIs to the world, the world pharmaceutical industry may face collapse.”
According to Hamied, India also needs a better drug pricing policy and a more efficient drug regulatory system as there are many new generic medicines in the queue for safety clearance but lately there was been a long delay in decisions.
Hamied announced he will step down as Cipla’s joint managing director in April. His brother (M.K. Hamied) and his nephew, backed by a team of professionals hired from other companies, will take over the helm.
That has caused speculation about the future direction of Cipla. But after spending a day with Yusuf Hamied, one gets the distinct feeling that at least in his lifetime Cipla will remain true to the cause of making medicines affordable to the sick in India and other developing countries.
Comments Off on World Health Assembly approves WHO-South Centre official relations
The Sixty-sixth World Health Assembly held in Geneva from 20 to 28 May 2013 approved by consensus a Resolution A66/46, the “Agreement between the World Health Organization and the South Centre”, in accordance with Article 70 of the WHO Constitution: “The Organization shall establish effective relations and co-operate closely with such other inter-governmental organizations as may be desirable. Any formal agreement entered into with such organizations shall be subject to approval by a two-thirds vote of the Health Assembly.”
This agreement is the framework under which the South Centre will be able to officially observe and contribute institutionally to the work of the WHO and its bodies as an intergovernmental observer organization, on par with other intergovernmental organizations.
The agreement aims to strengthen cooperation between WHO and the South Centre in all matters arising in the field of health that are connected with the activities and commitments of the two organizations, including access to medicines and other technologies.
The agreement reaffirms, “the complementary commitment to serve the needs of their respective Members States (…) through all appropriate means, including by: research activities, information collection and dissemination, and the convening of meetings of representatives of their Member States and other relevant stakeholders.
During the discussion at the WHA on this issue, the representative of China said: “The South Centre as an important intergovernmental organization of development countries plays an irreplaceable role in supporting the work of the United Nations and its agencies, in promoting the South-South solidarity and cooperation, in helping developing countries to build consensus, and in coordinating developing countries’ actions on a range of issues including health. China always takes practical action to support the South Centre’s activities on health issues. China believes that based on the good cooperative relationship which has been established between the WHO and the South Centre, the two organizations should make it official as soon as possible in order to strengthen further cooperation.”
Many other developing countries including Ecuador, Thailand, Sri Lanka, India, Malaysia, Bolivia and Iraq, as well as the United Kingdom and the United States also spoke in support of the resolution for the South Centre entering into official relations with the WHO.
The South Centre’s Secretariat believes that the formalization of the institutional relationships between WHO and the South Centre is an important step that will benefit the work of both institutions on improving global health in developing countries in particular.
By Germán Velásquez, Special Advisor for Health and Development of the South Centre
Comments Off on Analysis of the WTO Impasse and Issues Facing the Bali Ministerial
India’s former Ambassador to the WTO gave a comprehensive analysis of the present impasse in the Doha Round and the issues confronting developing countries in the run up to the Bali Ministerial in December. His presentation at the South Centre conference in Geneva is published below.
By Srinivasan Narayanan
I deem it to be a great honour to be participating in the session on “WTO and the Multilateral Trade System: The Fate of Doha, the Agenda Bali Ministerial and Beyond”. At the outset, I would like to express my deep sense of gratitude to the South Centre and all of you for giving me this privilege.
I must confess that my feelings are mixed as I take the floor to speak on this topic. I think some of you would be aware that I was the first Indian Ambassador to WTO and that I had participated in the first four Ministerial Conferences, which took place at Singapore, Geneva, Seattle and Doha. In my capacity as the Indian Ambassador, I had intensely participated in the preparatory process for the Doha Ministerial Conference and was actively involved in assisting the Indian Commerce Minister at Doha. It was with great difficulty that consensus was achieved at Doha (In fact, the conference was extended by one day, beyond the original schedule of five days in order to achieve the consensus).
Seven Factors Why Developing Countries Agreed to the Doha Round
Developing countries, in spite of the doubts they had entertained at that stage regarding the desirability of launching a complex and ambitious new Round of Negotiations, decided to join the consensus taking into consideration, mainly, the following factors:
1. The assurance given by the Developed Countries that the needs and interests of Developing Countries will be placed at the heart of the Doha Work Programme (this assurance is incorporated in Para 2 of the Ministerial Declaration).
2. Provision in Paragraph 12 of the Ministerial Declaration for negotiations on all outstanding implementation issues as an integral part of the Doha Work Programme, within the framework of Single Undertaking.
3. A clear mandate for implementing the built-in agenda in Article 20 of the Agreement on Agriculture for liberalization of the agricultural sector, a sector which had been kept out of the GATT system during its entire 46 years and a sector which did not see much of meaningful liberalization during the implementation period of the Uruguay Round Agreement on Agriculture. Also the fact that the mandate for agriculture negotiations enables Developing Countries to effectively take account of their development needs, including Food Security and Rural Development.
4. Incorporation of the ‘less than full reciprocity’ principle in the negotiating mandate for NAMA.
5. A clear mandate for implementing the built-in agenda for further liberalization of the services sector as provided for under Article XIX of the GATS and recognition of promoting development of Developing and Least Developed Countries as one of the goals of negotiations.
6. A commitment to the objective of duty free, quota free market access for products originating from LDCs.
7. Postponement of decision on commencement of negotiations on Singapore Issues to the Fifth Session.
As somebody who had to work hard to convince my own delegation at that time to join the consensus, in spite of misgivings they had, it is not possible for me to talk about the “Fate of Doha” without any emotion. Regretfully I realize today that out of the seven factors taken into consideration by a large number of developing countries for joining the consensus on 14 November 2001, six factors have not been realized even after a decade of negotiations. What is even more painful is the fact that the prospects for realizing these factors do not seem to be particularly bright. In short, the promised development round continues to elude developing countries. There is general agreement among trade negotiators and academics that the Doha consensus was arrived at on the basis of public statements made by developed countries and the then Director General that the key concern of the new round was to strengthen the developmental aspects of the WTO.
To me, it looks a bit ironical that powerful Members of WTO who, in November 2001, argued forcefully that to effectively counter terrorism (reference to 9/11 attack) lies in launching and successfully completing multi-lateral trade negotiations, with development at its focus, today make statements virtually implying that the Doha Round is not do-able.
Reasons Why the Doha Round Is Stalled
Trade negotiators, academics and researchers have identified a number of factors which according to them are stalling the Doha negotiations. Some of these factors are:
1. The issues covered by negotiations have a significant relationship to the overall economies of countries. Hence, the WTO Members are not in a hurry to yield ground and undertake new commitments.
2. Unlike during the Uruguay Round Negotiations, the Developing Countries are now acutely aware of the implications of the commitments they undertake in the WTO: (a) perpetual nature of the commitments undertaken in the WTO and (b) trade action by other Members, if the Member undertaking commitments does not live up to its commitments. Because of this awareness, Developing Countries try and resist pressures and unreasonable demands made on them.
3. Major Developed Countries are demanding significant concessions from the Developing Countries, especially from the so-called emerging economies like China, Brazil, India and South Africa. However, Developed Countries themselves are unwilling to offer adequate concessions to Developing Countries.
4. Poor economic environment since 2008 in major developed economies resulting in high rates of unemployment.
5. Unlike in the past, Developed Countries are not able to steer the negotiations in the directions of their choice because of the increased awareness of the implications of WTO commitments on the part of the developing countries as well as the formation of a number of issue-based Developing Countries-alliances which enables them to resist undue pressures.
Regretfully, powerful Developed Countries do not want to accept the existence of these factors. The reason given by powerful Developed Countries to explain their reluctance to move forward and complete Doha Round within the framework of Single Undertaking, as originally envisaged, is different. They are saying that there is “not enough on the table”. This argument has been refuted by many international trade experts. For example, some World Bank researchers have pointed out that what is on the table would constrain the scope of tariff protection in goods, ban agricultural export subsidy in the industrial countries and sharply reduce the scope for trade distorting domestic support. Patrick Messerlin, an academic, has argued that the Doha Round would improve certainty. He has pointed out that in the industrial sector, emerging economies would cut their average-bound tariff to roughly 13-15 per cent, with very few tariffs remaining above 20 per cent.
Developing Countries have also pointed out that there is an imbalance in the outcomes of the 2008 Text in agriculture and non-agricultural market access, in the sense that Developed Countries, while looking for ambitious tariff cuts by Developing Countries in respect of industrial goods, are not willing to accept an equal degree of ambition when it comes to reduction in agricultural subsidies by Developed Countries.
It is rather strange that some powerful developed Members like the US are creating an image of themselves as aggressive trade liberalizers and are portraying some of the emerging economies as defensive in their response to requests for liberalization. It is very well-known that the US has a defensive position with regard to a large numbers of issues like agricultural subsidies, carve out in agriculture market access, cotton issue, 100% duty-free quota-free (DFQF) market access for LDCs, mode four market access in Services, etc.
Most important of these issues is the issue of agriculture support. Based on the notifications available in the WTO Secretariat, many experts have shown that the total domestic support to agriculture increased from US$ 60.9 billion to US$ 130.3 billion during the period 1995 to 2010. It is also worth recalling that the US which made a statement, at a time when it was not enthusiastic about trade facilitation negotiations, that rules of origin constitute the single most important trade facilitation measure, is not allowing negotiations on non-preferential rules of origin, originally scheduled for completion by July 2008, to be completed. Again, if I am not mistaken, MFN principle in Maritime services, which was suspended at the instance of the US in 1996 or so remains suspended even till today.
The US is also portraying as though the emerging economies are very strong and that they can easily undertake the commitments demanded by the US. A recent World Bank study shows that in 2011 the per capita GDP of Brazil was at $12,594, South Africa at $8,070, China at $5,445 and India at $1,489, whilst the average per capita GDP in OECD countries was $41,225, with the US per capita GDP being $48,112. An earlier World Bank study had found that during the currency of the Doha Round, the absolute per capita income gap between the key emerging economies and advanced economies has widened further.
Some recent studies have also shown that the emerging countries are still the home of a large number of poor people (living under $1.25 per day); with over 200 million in China, 456 million in India and 81 million in Brazil.
Therefore, the US position that the high growth of emerging Developing Countries should be associated with increasing “convergence” of these economies with OECD high-income countries is not correct. It is inexplicable as to why the US should target 4 countries who are low per capita income countries, who are home to a large number of the world’s poorest people and who are nowhere near achieving convergence with OECD economies, in any foreseeable future.
The Developed Countries have expressed the feeling that the Doha Round is not do-able in the short-term and have argued for ‘early harvest’ of only Trade Facilitation suggesting that other subjects in the Doha Mandate should be kept on the backburner. They are also taking the stand, that since multilateral negotiations are stalling, plurilateral negotiations in areas of interest to them like Services should be initiated. They also want new issues including climate change, investment, competition and food security to be brought on the negotiating table. Their preference now is for negotiating issues piece by piece, thus implicitly departing from the Single Undertaking concept. However, there is one difference between the US and EU on plurilaterals. The EU would like plurilaterals to be based on the MFN principle. However, the US does not want the plurilaterals on a MFN basis.
Developing Countries who are extremely disturbed by the stance of major WTO players have rightly taken the following stand:
1. The Doha Round should be completed, with its development mandate intact, on the basis of the Single Undertaking.
2. Plurilateral approaches are not acceptable since they will exclude or marginalize a large number of Developing Countries.
3. The idea of focusing on new issues like investment, competition, energy and climate change whilst keeping the Doha Mandate on the back burner is not acceptable.
4. There should be early harvest of issues of interest to the LDCs, such as cotton, duty free, quota free market access.
Attempts by Developed Countries to Abandon the Round
The proposal to effectively abandon the Doha Round and to negotiate on some issues of interest to Developed Countries on a stand-alone basis is highly regrettable. Their main interest seems to be in the area of Trade Facilitation and Services.
The Developed Countries are trying to hard sell trade facilitation, as though it will contribute enormously to the export earnings of Developing Countries. As many Developing Countries have pointed out, infrastructure mainly ports, roads, railways, computerization, etc. plays an important role in export facilitation and the Developing Countries face significant problems in the area of infrastructure. It is no exaggeration to say that trade facilitation as is being currently negotiated in the WTO amounts to import facilitation by Developing Countries for the products of Developed Countries. Therefore, many developing countries are concerned about the current proposals on the table with regard to Trade Facilitation.
As far as the procedural issue is concerned, Developed Countries are citing Paragraph 47 of the Doha Ministerial Declaration which provides for “agreements reached at an early stage being implemented on a provisional or definitive basis”. This para also stipulates that early agreements shall be taken into account in assessing the overall balance of the negotiations. More importantly, what is being forgotten is that the main purpose of Para 47 is to provide for Single Undertaking and that “early harvest” is only an enabling sub-clause in Para 47. It is rather strange that some Developed Countries are trying to use Para 47, which basically provides for Single Undertaking and recognizes the possibility of early harvest on some subjects without prejudice to overall balance of negotiations, to undermine the Single Undertaking concept. The Doha negotiations have been going on for almost 11 years as against the originally envisaged period of three years. I do not think developing countries should become a party to subversion of Para 47 by selective use of Para 47 by some developed countries.
As far as the thrust for a Plurilateral International Services Agreement is concerned, a plurilateral services agreement applicable only to its members is not tenable legally within the WTO system.
In terms of Article II.1 and Article III.2 of the Marrakesh Treaty, any negotiations for trade accord on any of the agreements in Annex-1 ought to be conducted with the WTO as forum for such negotiations. Article II.1 of GATS provides for MFN treatment. Thus, parties to a possible plurilateral agreement on Services have to respect the MFN principle. Therefore, if a plurilateral services agreement has to coexist with GATS and has to get included in Annex-4 of plurilateral trade agreements, the Marrakesh Treaty has to be amended and such an amendment has to be accepted by all Members, as envisaged in Article X.2 of the Marrakesh Treaty.
If the idea, however, is to have an agreement under Article V, such an agreement has to comply with the provisions of Article V of GATS. Article V.1(a) stipulates that such an agreement must have substantial sectoral coverage. The relevant footnote explains the term “substantial sectoral coverage” as follows: “This condition is understood in terms of number of sectors, volume of trade affected, and modes of supply. In order to meet this requirement, agreement should not provide for the a priori exclusion of any mode of supply”. It is doubtful whether those countries which are pushing for a plurilateral services agreement are really thinking in terms of “substantial sectoral coverage”.
It is curious that these very same Developed Countries, who are now saying that except for Trade Facilitation the Doha Mandate is not do-able, were responsible for persuading Developing Countries to join the consensus for launching of the Doha Round on the promise of delivering development to Developing Countries. Right from the early part of 2002 to the end of 2008, serious negotiations took place. The December 2008 Texts represented the Fourth Revision with regard to Agriculture, NAMA, and Services negotiations.
From 2009 onwards, the US began to take the stand that there is not enough on the table and that negotiations cannot proceed on the basis of the 2008 Texts. I have already explained as to why the argument ‘not enough on the table’ is a fallacious argument. Besides, all the 2008 Texts represent about seven years of difficult negotiations. Obviously, some portions in these Texts are in square brackets. It is nobody’s stand that these texts are consensus texts; however they are definitely texts based on 7 years of negotiations. It is the responsibility of Developed Countries to resume negotiations on the basis of the 2008 texts and make efforts for final consensus in the area of Agriculture, NAMA and Services.
If we look at the Doha Ministerial Declaration, in the Work Programme, the first item relates to implementation related issues and concerns and the second item is Agriculture. The Uruguay Round Agreement on Agriculture, in its Article 20, has a built-in provision for further liberalisation of Agricultural Sector. If the Doha Work Programme is abandoned, or put on hold it would imply that the Membership has not implemented Article 20 of the Agreement on Agriculture faithfully. If there is no further liberalization in Agriculture, it would mean that the balance of rights and obligations arrived at in the Uruguay Round is upset.
It is very well-known that Developing Countries have a comparative advantage in the area of agriculture and Developed Countries kept agriculture out of the GATT system for 46 years. In order to make Developed Countries agree to include Agriculture as a subject for negotiations in the Uruguay Round, Developing Countries agreed to the demand of Developed Countries for including subjects like intellectual property rights and services in the Uruguay Round mandate.
If Developed Countries now want to avoid negotiations on Agriculture, with the obvious objective of avoiding any further liberalisation in this sector through reduction of domestic support, tariffs and export subsidies, the Developing Countries can legitimately claim that the balance of rights and obligations arrived in the Marrakesh Agreement has been upset and that action should be taken to restore the balance of rights and obligations.
I recall that whenever Developing Countries raised the implementation issue before Seattle, at Seattle, before Doha and at Doha, the standard response of powerful Developed Countries was that we were trying to upset the fine balance of rights and obligations arrived at in the form of Uruguay Round Agreements.
I recognise that there is a big challenge confronting the Developing Countries in the on-going Doha Round now. Powerful Developed Countries are trying to scuttle the Doha Mandate except to the extent it relates to Trade Facilitation.
It is obvious that it is completely against the interests of Developing Countries to abandon the Doha Round and do only Trade Facilitation. There is no way that the development mandate of the Doha Round can be realized by giving a go-by to the concept of Single Undertaking. The Developing Countries should point out to countries like the US that they want the Doha Round to be completed as per the original mandate, even if it takes more time. It is possible that the US may not pay heed to the plea of the Developing Countries. In that situation, in my view, the only option available to Developing Countries is to remain steadfast in their opposition to the approach of the Developed Countries.
They should avoid falling into the trap of Plurilateral International Services Agreement. If the Developing Countries, especially emerging economies, maintain their opposition to plurilateral services agreement, the Developed Countries will have no option but to come back to the multilateral forum. Therefore, in my view, there is a great responsibility on the shoulders of emerging economies. Developed Countries seem to be hoping that either the fear of exclusion on the part of some emerging economies or competition among some emerging economies to capture the Services Market of the Developed Countries will do the trick for them and that the proposed International Services Agreement will become a reality. In this context, I am of the view that emerging economies have a great responsibility towards the multilateral trading system as well as less influential other Developing Countries.
Fallacious Arguments to Change WTO’s Decision-Making System by Blaming Small Countries
Recently, an academic has argued through his newspaper articles that the WTO should be “de-democratized”. It is very strange that a scholar of this calibre should be saying that “WTO suffers from too much democracy and associated blocking process”. He should know that the present stalemate in the WTO is the result of the US refusal to continue the negotiations on the basis of December 2008 Texts. It is not as if some small country has blocked the progress in negotiations. It is the refusal of the US to continue negotiations on the basis of December 2008 Texts (which have evolved as a result of painful negotiations over a period of seven years) that has resulted in the current stalemate. It is the proposal of the US and EU to virtually abandon the Doha Mandate except in respect of trade facilitation that is responsible for the present crisis, and not any act of commission of omission by any small country.
On the basis of my 7 years experience as Ambassador to WTO and as an Observer of WTO activities subsequent to my demitting office, I would like to say that it is extremely unfair to blame small countries for any crisis, present or past, in the WTO. The article presents a totally misleading picture by creating an impression as if small countries exercise disproportionate influence in the WTO and they are frequently using their blocking power. This is nothing but adding insult to injury. In my assessment, only the US and EU exercise real blocking power in the WTO, though sometimes countries like India may be accused of blocking something or the other.
It is the duty of scholars to point out that the responsibility is primarily on the US to abandon its mercantilistic approach and recognize the significance of what is already on the table. They should also urge the US to review the unfair demands it has been making on Developing Countries, especially emerging economies. It is also the responsibility of these scholars to highlight the fact that the US, which is the world’s largest and richest economy and which has benefited most from liberalization under GATT and also WTO agreements like TRIPS has a moral responsibility to deliver on the development promise of the Doha Round.
Mr. Joseph Stiglitz, the famous economist, wrote an article about two years back, titled “Of the 1%, by the 1%, for the 1%”. In this article, he has dealt with the subject of growing inequality in American Society. He has used, in this article, the phrase ‘self-interest, properly understood’ and has argued that the real interest of the 1% lies in improving the living standards of the other 99%. Similarly, the Developed Countries should realize that their long-term interest lies in enabling Developing Countries to develop by ensuring that the WTO system provides the required degree of policy space to Developing Countries. If the Doha Mandate centered on the development is fully implemented and the Developing Countries are enabled to reap some benefits, it will be good not only for Developing Countries but for Developed Countries as well.
Some Key Issues Concerning the Bali Ministerial
The Bali Ministerial Conference will, no doubt, be influenced by the course of action set out at the Eighth Ministerial Conference held in Geneva in November 2011. In that Conference, the Ministers had acknowledged that the Doha Development Agenda could not be delivered as expected in the near future and that “we need to more fully explore different negotiating approaches and advance negotiations where progress could be achieved”. The WTO Membership is looking at various subjects like trade facilitation, S&D monitoring mechanism, 28 Agreement specific proposals, the LCDs issues, Dispute Settlement Understanding, G-20 proposal on TRQ administration, G-33 proposal on Food Security for possible decisions at Bali. I do not want to go into details but I would say that issues of great interest to LDCs, and Agreement Specific Proposals relating to implementation should find a resolution, on priority, at Bali.
I would also like to make a brief reference to the G33 proposal on Food Security. This proposal is based on what is already negotiated and available without square brackets in the December 2008 document. This proposal essentially means that acquisition of foodstuffs by Developing Countries with the objective of supporting low income or resource-poor farmers and provision of food stuffs at subsidized prices with the objective of meeting food requirements of the urban and rural poor should not have any implication for their AMS. Therefore, formalizing this as a Decision at Bali should give great comfort to a large number of Developing Countries who have to take care of the interest of their vulnerable farmers and poor consumers. I am a bit surprised that one major delegation had observed in the TNC in December 2012 that ‘there are real questions about the scale and do-ability of the proposal by G33’. The amount of subsidy provided to the Agriculture Sector by major Developing Countries is something well-known and does not need repetition here. Against this backdrop, the G33 proposal is a very tiny proposal and it will be extremely unfair to reject even such a modest proposal.
In my view, the challenge for Developing Countries at Bali will not only be with regard to decisions on subjects like Trade Facilitation, LDC issues, G33 proposal on Food Security, etc., but with regard to the Developed Countries’ game plan with regard to the remaining portion of the Doha Mandate, especially Agriculture.
I am deeply conscious of the fact that the Doha Round is not going to be completed at Bali. My anxiety is that the Doha Round should not be given a farewell at Bali. I am particularly heartened by the fact that more than 100 Developing Countries have formally stated that the Doha Round should be completed on its current mandate on the basis of Single Undertaking and Consensus. In this context, some of you will recall Mr. Lamy’s statement at the General Council Meeting of 11th December 2012, while summarizing the statements of Members’ assessment about the possibilities for the Bali Meeting; ‘what we heard on Friday is loud and clear: MC9 is not the end of line, but rather a stepping stone on a longer term road map leading to the conclusion of the Round, which now needs to be framed’. Therefore, it is the responsibility of the Developing Countries at Bali Ministerial to ensure that a roadmap for completing the Doha Round of Negotiations as envisaged in the Doha Ministerial Declaration is finalised and adopted at Bali.
I feel yet another challenge Developing Countries may face at Bali might relate to the very structure and mode of decision making in the WTO. It is likely that at Bali, some Developed Countries would implicitly argue that the Single Undertaking, Consensus and the Member-driven nature of the WTO constitute an impossible trinity and might come up with some proposal to marginalise Developing Countries even further in the WTO system. Developing Countries should ready themselves to counter any onslaught on the WTO structure and system of decision making which are primarily aimed at weakening Developing Countries’ influence in the WTO system.
I find that some scholars are trying to argue that greater inclusiveness and transparency in the WTO system is detrimental to WTO’s efficiency. It is inconceivable that greater inclusiveness and transparency in any international organization could adversely impact on the efficiency of the organization. I am afraid these scholars look at efficiency from the perspective of some powerful Members of the WTO who naturally would like to achieve their objectives within as short a time as possible. But the issue is whether the objectives sought to be achieved by these powerful Members are in the interests of a large number of poor countries. It is likely that this argument of transparency and inclusiveness vis-a-vis efficiency will be used to scuttle the Doha Mandate. Developing Countries should get themselves prepared to meet this self-serving argument head-on.
Before concluding, I would like to say that I am deeply conscious of the difficult and challenging times Developing Countries are passing through in the multilateral trading system. They deserve to be complimented for the energy with which they have been trying to defend their interest in spite of heavy odds. I would also like to compliment the South Centre for their role in helping the Developing Countries.
Before concluding, I would like to express my good wishes to all the Developing Countries and wish them all the best in dealing with complex challenges confronting them here in Geneva now and in the future, at Bali.
Comments Off on India Calls for Equity to be Cornerstone of Post-2020 Climate Regime
At the global climate change talks that recently took place in Bonn, the Indian delegation presented a statement on the importance of equity as a principle that should be operationalised in any new regime to be agreed on in 2015 that will apply in the post-2020 period. Stressing that equity is the cornerstone of the UN Climate Change Convention, it called for equity to remain the cornerstone of the post-2020 system.
The statement was presented by Mr. T.S. Tirumurthi of the Ministry of Foreign Affairs, India during a roundtable on “science and equity” in the UNFCCC’s Working Group on the Durban Platform. Several developing countries referred to the statement and supported its content during the discussion. Below is the text of the statement.
We have stressed the importance of the developed country Parties meeting their commitments under the Convention in the pre-2020 period to bridge the ambition gap. If they do not meet their commitments in the pre-2020 period, then equity in the post-2020 period will be seriously affected.
When we have science indicating to us where we should reach, it is inevitable that the principles of the Convention should apply.
We reject any notion that ambition levels in the post-2015 period should be decided solely on whether a country has financial resources or not – in other words, it should not be decided solely on respective capabilities.
The future we are discussing today has to be based on equity applied to science.
Otherwise, it will result in merely transferring the commitment of developed countries to developing countries in the post-2020 period. This is unacceptable.
Equity was an important element of the decision on Durban Platform.
Equity is a concept that has both ethical as well as scientific attributes in the context of climate change.
Article 3.1 of the Convention talks of equity. It enjoins all parties to protect the climate system on the basis of equity. The term itself is not defined in the Convention.
But, there are practical examples in the Convention, of how equity can be achieved:
– The preamble of the Convention talks of the largest share of emissions originating in developed countries or the principle of historical responsibilities as we know;
-It talks further of the share of global emissions originating in developing countries rising to meet their social and development needs;
-Art 3.4 admits that ‘economic development is essential for adopting measures to address climate change’;
-It says that the developed countries will take the lead in combating climate change;
-Last, but not the least, differentiated commitments are recognized under Article 4 as manifestations of Equity.
Equity is therefore a cornerstone of the Convention. It should continue to be the cornerstone for the post-2020 period.
The notion that since the post 2020 arrangements are to apply to all parties, the principle of equity and common but differentiated responsibilities (CBDR) no longer apply to the parties or that it be dynamically applied according to respective capabilities only, is incorrect. This simply does not stand to reason. The Convention without Equity would be a contradiction in terms. Equity will not be served by an agreement based only on respective capabilities.
There is another impression going around that Equity is an impediment to raising or reaching higher ambition for mitigation. Often our call for respect for Equity in negotiations is seen as our hesitation to act. We would like to emphatically dispel this notion. As we see it, Equity is not an impediment to ambition; in fact, it is a key enabler to action by all parties.
Equity would be achieved if it respects the Right to Development and the imperative of poverty eradication of developing countries. The Right to Development is a key element of what Equity seeks to articulate. We are conscious, however, that it is not a right to pollute. But it is a legitimate right that ensures sustainable development and survival for the millions in developing countries who are most vulnerable to Climate Change. As our Prime Minister Indira Gandhi stated in 1972 in the Stockholm Conference, poverty is the greatest polluter.
Equity is also not just linked to mitigation. It permeates all aspects of elements under negotiation. Aspects such as finance, technology transfer, adaptation etc all need to be infused with Equity.
Enhanced action should be based on CBDR and Equity applied to science. In other words, equity is an integral part of the post-2020 period and we need to incorporate this into the new post-2020 period arrangements.
Comments Off on 400 ppm: Climate threshold crossed, but no solution in sight!
The Greenhouse Gases have reached 400 parts per million in the atmosphere but emissions keep growing and the political solution needed to curb them is still elusive.
By Martin Khor
A key threshold measuring the march of global warming was crossed recently, when the concentration of carbon dioxide in the atmosphere topped 400 parts per million.
On 10 May scientists announced that 400.03 ppm had been measured at a climate-observing station in Hawaii that is often used as a benchmark. The global average is expected to cross the 400 ppm mark in the next year.
This means that for every one million molecules in the Earth’s atmosphere, there are 400 molecules of carbon dioxide.
CO2 concentration in the air is linked to the Earth’s temperature. The widely believed relationship is that the 450ppm level should not be crossed if global warming is to be below 2 degrees Celsius compared to pre-industrial revolution level around 1750.
In fact more recently, some prominent scientists like James Hansen have found that crossing 350 ppm is already dangerous. In line with this, the existing CO2 in the atmosphere should be reduced — though how this can be done is really unclear.
Already the impacts of climate change are being felt in dramatic ways in the increase in extreme weather events, ranging from higher rainfall and extensive flooding in Pakistan, China, Southeast Asia and United Kingdom, drought in parts of Africa and the United States, raging fires in Australia and Russia, and big storms or hurricanes in the Philippines, Central America and the United States.
How far worse will the situation be when more climate change is induced when the CO2 concentration increases from 400 ppm to 450 ppm and beyond?
The increase in concentration has been dramatic. In 1958, it was 315 ppm, and this rose to about 375 ppm in 2000 before jumping to 400 ppm now.
At this rate, we are on track not for a 2 degree but for a 3 to 5 degree increase in temperature by the end of the century – a catastrophe.
The present temperature is 0.8 degrees above the pre-industrial level and we are already seeing the major adverse effects. Imagine a 2 degree and worse a 4 degree increase in the world that our children and grandchildren will inherit.
What needs to be done? Most importantly, the level of emissions has to be cut significantly.
The UN Environment Programme’s 2012 report on “emissions gap”, written by 55 scientists, shows that the total global emission in 2011 was 50 billion tonnes or 50 giga tonnes (gton) of CO2 equivalent (meaning CO2 plus other greenhouse gases like methane but expressed in terms of CO2).
The CO2 equivalent emission level has been rising rapidly; it was 40 gton in 2000 before climbing to 50.1 gton in 2011. This means that the annual global emission has risen by 1 gton or by 25% in just a decade.
The UNEP report estimates that if we are to keep the world’s temperature to 2 degrees below the pre-industrial level, the annual global emissions must be brought down to 44 gton by 2020 and then continue to decrease.
However, if there are no policy changes (a business as usual scenario), the emissions are projected to rise to 58 gton in 2020.
The good news is that governments of many countries have pledged to take actions to cut their emissions.
The bad news is that these pledges are not enough. In the best scenario (if governments succeed in keeping their best pledges and in the best conditions), the 2020 emission level will be 52 Gton.
That is way higher than the 44 Gton limit required to keep temperatures below the 2 degree level, though lower than business-as-usual.
And in the worst scenario (governments take actions but in the lower end of the range in their pledge, and with bad conditions), the 2020 emission level will be 57 Gton, which is almost the same as the business-as-usual level of 58 Gton.
In any case, the projected emissions in 2020 will miss the 2 degree boat. They are in line with boats going towards 3 to 5 degrees, in other words towards a climate disaster.
How to bring the emissions by 2020 down to 44 Gton?
The technical solutions are not that difficult to conceptualise. The UNEP report provides suggestions on cutting emissions through changes in buildings, transport and forestry practices and policies. To that can be added policies in energy, industry and agriculture.
The problem is the politics and costs of change. A global climate agreement is difficult to achieve because of differing perspectives on what is a fair distribution of effort and who will bear the costs.
Developing countries believe that the rich countries have a historical responsibility to take the lead in emissions cutting, and to pay (at least significantly) for the expenses incurred by developing countries in switching to low-carbon technologies and policies.
This historical responsibility is due to the fact that the developed countries are responsible for putting most of the CO2 in the atmosphere so far. They have grown rich partly because their economies grew on the basis of cheap fossil fuels. And they have richer economies.
The developing countries fear that if they are to take on the full burden of changes, their economic growth will be affected and their development efforts will be diverted from food and health care and from economic development towards climate measures.
They thus want the rich countries to transfer funds and technology to support their switch to a climate-friendly growth path.
Developed countries on the other hand are reluctant to accept “historical responsibility”, arguing that they cannot be held responsible for what their forefathers, in ignorance, did.
They are willing in theory to provide funds and technology. But in practice little funds and very little (if any) technology have been transferred to the developing countries.
The developed countries also want all countries (not only themselves) to sign on to the same type of obligations in emission cuts.
This is seen by developing countries to be contrary to the principles of equity and common but differentiated responsibilities that are central to the UN Climate Change Convention.
Thus the battle of principles and words have continued in the past few years, and the prospect that a comprehensive agreement will be signed by 2015 (the current deadline) is not bright.
While the science of what is happening to our climate is getting clearer, and the technical solutions as to how to curb emissions in various sectors are being developed, it is the politics of climate change that needs to be resolved.
There are no easy solutions even as the 400ppm threshold is being broken and as the world sprints towards the next threshold of 450ppm.
Comments Off on Serious threat to Asian Economic Model: proposals to curb State-owned Enterprises through trade agreement
The successful East Asian model of “state-driven capitalism” is being threatened by proposals in the TPPA trade agreement to remove possible advantages of state-owned enterprises.
By Martin Khor
Many articles and books have been published on the contrast and competition between the present Western and the Asian-style economic models.
Western countries are said to have the free-market model based on competition among private firms, with the government taking a hands-off approach.
East Asian countries are branded as practising “state capitalism” in which the government plays a major role in helping the local private sector and the state also fully or partially owns many enterprises.
The Western countries are increasingly attacking the Asian model, claiming that state-owned companies or state-aided commercial firms have an unfair advantage vis-à-vis the foreign firms competing with them.
In Asia, countries with a substantial role of the state include China, Malaysia, Vietnam and Singapore. Of course, in Japan and Korea their domestic firms grew to become world-beaters with the systematic backing of their governments.
For these countries, the so-called state capitalism (or in the case of socialist countries, market-oriented socialism) have worked well through industrial development and relatively high and sustained economic growth.
Some Western countries have been trying to curb or even eventually eliminate the Asian model of state-owned or state-aided capitalism.
Of course this is largely hypocritical because the American, European and Japanese agricultural sectors are highly subsidised and protected; many of their farms could not survive without massive state aid and high import tariffs.
Many of their banks and industrial firms are also subsidised in various ways, including through the recent multi-billion dollar bailouts in the wake of the recent financial crises.
This has not stopped these countries from attacking the Asian model. The latest attempt to curb this model is through the negotiations in the Trans Pacific Partnership Agreement (TPPA), a trade and investment treaty involving the United States, Canada, Malaysia, Singapore, Vietnam, Brunei, Peru, Chile, Mexico, Australia and New Zealand.
The TPPA contains an important section on State-Owned Enterprises (SOEs), championed by the U.S. and Australia.
The TPPA drafts are secret, so the text of the SOE section is not known. However, it can be anticipated that the section will contain disciplines to curb and shape the behaviour of three types of SOEs.
The recently concluded United States bilateral FTAs contain a competition chapter that deals with two types of SOEs. For example, the US-Peru FTA has disciplines on designated monopolies and state enterprises, and it is likely that the US will propose something similar in the TPPA.
That FTA says that government and private monopolies (designated by the government) shall act solely in accordance with commercial considerations, including with regard to price, quality, availability, transportation, when buying or selling the monopoly good or service.
They shall provide non-discriminatory treatment to investments, goods and services of other TPPA members, with respect to the purchase and sale of the monopoly goods and services. And they shall not use their monopoly position to engage in anticompetitive practices through their dealings with their parents, subsidiaries or other enterprises with common ownership in a non-monopolised market that adversely affect the investments of other countries.
State enterprises shall similarly provide non-discriminatory treatment in sale of goods or services to investments of other countries.
More importantly, the US and Australia are proposing a third type of SOE to be subject to disciplines. According to press reports, Australia has also introduced the principle of “competitive neutrality” to discipline the SOEs.
How this principle will apply can be anticipated from the Australian government’s competitive neutrality guidelines.
This is based on the concept of a “government-owned business”. The state-owned business enterprise which competes with private companies may obtain advantages, impeding the ability of the private sector to compete on equal terms.
According to the Australian guidelines, these advantages include exemptions from taxes; cheaper debt financing (because of the low-risk classification or government guarantees); absence of need to make a commercial rate of return; and exemption from regulatory constraints or costs.
To offset these advantages, the Australian guidelines cover how government businesses should pay taxes in full; pay back to the central government the difference in their loan costs vis-à-vis private sector loan costs; pay license fees equivalent to the central government; and ensure that they obtain a commercial rate of return.
It is likely therefore that the draft of the TPPA will have disciplines along the lines above on a third category of SOEs – government-linked business entities involved in commercial activities that compete with the private sector.
The proposed disciplines could be along the line that “advantages” enjoyed by government-linked businesses such as those mentioned in the Australian guidelines be disallowed.
The implications for Malaysia, Vietnam and Singapore would be serious because their national economies are characterised by important roles of state owned enterprises or government linked companies.
The countries would have to move away from their successful development model and economic structure.
Moreover, SOEs have many functions including providing social services to the public, ensuring that poor and vulnerable groups are given special consideration.
This often means that SOEs cannot operate on solely commercial grounds; and that several of them depend on government subsidies and assistance, and there are also cross-subsidies in that the profitable aspect of an SOE may finance non-profitable (but socially important) activities. There is a danger that the TPPA section on SOEs will prevent or hinder the socially useful functions of SOEs.
The proponents of the SOE section argue that foreign companies are not able to compete fairly with SOEs. They want the TPPA to remove or reduce the “advantages” of the SOEs.
But that could threaten the survival of the system that has helped propel the East Asian model, a creative and dynamically changing mixture of state and market.
The TPPA negotiations are still going on, and a text on the SOEs section is not yet final, so there is scope for the different views to be expressed.
Much is at stake, and it is important for more information to be made available on the negotiations, including on SOEs.
Comments Off on South Centre congratulates WIPO Members for concluding treaty on access to published works for blind and visually impaired persons
On June 27, a new treaty under the auspices of WIPO was concluded that will facilitate access to artistic and literary works in any media for persons who are blind, visually impaired or otherwise print disabled. On 29 June, 51 countries signed the Marrakesh Treaty. The task now is to achieve the 20 ratifications needed to make the treaty operational.
Below is an extract of the South Centre statement delivered at the WIPO Diplomatic Conference on 27 June 2013 by Viviana Munoz Tellez, Programme Manager of the Centre’s Innovation and Access to Knowledge Programme.
The South Centre congratulates all WIPO Member States for having successfully concluded this Diplomatic Conference. This treaty, the first of its kind, is an important event in the history of WIPO.
The treaty denotes the conviction of all Member States to create an enabling international legal framework to ensure that no one, in particular vulnerable populations, are excluded from participation in the knowledge society. Intellectual property rights should not be allowed to become a barrier to access to information and knowledge.
Today an important step was taken to respond to the needs of stakeholders in the copyright system, other than right holders. The treaty establishes minimum terms for limitations and exceptions that should be put in place in national copyright law to eliminate some of the obstacles that persons who are blind, visually impaired persons or otherwise print disabled face in getting access to books and other works in accessible formats. Member States may further implement in their national law other copyright limitations and exceptions. Developing countries and least developed countries should make full use of that discretion.
The South Centre stands ready to assist its Member States, and other developing countries and least developed countries, in the implementation of the treaty.
Comments Off on Africa Has Entered A New Season of Planning and Long-Term Development Thinking
This article, originally a background note for the “IDEP at 50” Conference, traces the history of economic planning in Africa and concludes that there is now a “new season” of planning and long-term development thinking in the region. This analysis is by the Director of the United Nations African Institute for Economic Development and Planning (IDEP).
By Adebayo Olukoshi
The interest in, or the revamping of, development planning is increasing on the African continent. There are a lot of opportunities and challenges connected to the rebirth of long-term development visions and planning in Africa. For an appropriate development planning, African countries must have a look back to their experiences of development planning and update their strategies in the light of the lessons learnt. In doing so, it is important to recall the history of the practice of development planning in Africa from the independence era in the late 50s and the early 60s.
At the time African countries began to attain their independence, development planning was widely practiced by governments around the world. Among the countries of Western Europe fresh from the experience of the Great Depression and the crises of the inter-war years, there was a generalized recognition of the fact that major investments had to be made in reinventing public policy and the role of the public sector in the development process. Much of this thinking was eventually encapsulated in Keynesian economics and it translated into the allocation of a central role to planning in the theory and practice of economic management.
In Eastern Europe, especially among the countries that made up the old Soviet Bloc, centralized systems of planning were put in place as a socialist counter to the widespread market failures – and the social dislocations associated with them – that contributed in part to the spread of revolution.
The practices of development planning such as they existed after the Second World War were refracted in their different varieties into policy design and the economic management approaches of the countries of Africa, Asia, Latin America and the Caribbean as colonial rule ended. India stood out as a prime example among the former colonies where the institutions and processes of planning were strongly embedded but China was also to embrace planning following its Maoist revolution of 1949. African countries mostly joined the train in the period from the 1950s onwards even if in countries like Ghana, known as the Gold Coast at the time, the planning experience predated this period.
The arguments in support of development planning were numerous and were also at the heart of ideological arguments among economists about how best to govern an economy and manage the development process. These arguments need not be repeated here as they will feature in the conference; suffice it to note that African countries adopted the planning approach to their development efforts in the conviction that it offered them a much better chance not only to master their nascent post-colonial economies but also speedily turn the table of underdevelopment.
Development planning remained in vogue across the continent until the end of the 1970s. Following the onset of economic crisis on the continent in the early 1980s, development planning was to come under a severe and sustained attack from the Bretton Woods institutions which, guided by the structural adjustment programmes that they designed, launched a determined effort to roll back the state and all semblance of state interventionism in preference for the “free” market. As part of this ideological and political onslaught, planning institutions were dismantled or downgraded and in their place, policies designed to “free” the market and roll back the frontiers of the state were promoted.
If the period from 1960 to 1980 could be described as the era of the growth and consolidation of development planning in Africa following its introduction in the post-War late colonial period, the period from the 1980s to the middle of the new millennium saw its decline and decimation. In place of the five yearly plans, and with the overarching objective of achieving and sustaining macroeconomic balance that was integral to the neo-liberal reform agenda on the continent, governments were, at best, encouraged to embrace Medium-Term Expenditure Frameworks and Poverty Reduction Strategy Papers (PRSPs), and in the worst cases, compelled to adopt cash budgeting.
In this policy climate, planning became taboo, treated almost as an unwanted relic of an equally unhappy past when the state not only held sway in the shaping and implementation of economic policy but also assumed an important regulatory role, and dominated the commanding heights of the economy.
Although episodes of crises in Africa, Latin America, and Asia occurred with varying intensity and a worrying frequency between the 1980s and the dawn of the new millennium as to caution against the untrammelled and unidirectional market liberalization policies which the Bretton Woods institutions were promoting with vigour and speed, helped by an array of conditionalities, these warnings were not seriously heeded until the financial and economic crises that struck in the United States in 2007/2008 and quickly spread to Europe.
Occurring as it did in the heart of global capitalism and shaking the economic foundations of the United States and Europe, the crises have had the effect of forcing a rethinking of development, the regulation and governance of the market, the developmental role of the state, the place of public policy, and the necessity of planning.
The context of global financial and economic crises, the relative weakening of the grip of the doctrine of neo-liberalism that it generated, the major increase in the economic performance and influence of countries like China, India, Brazil and Russia, and the resumption of noticeable levels of growth in many African countries after years of stagnation and decline all added up to create a new environment within which African policy officials could begin, once again, to develop long-term visions and adopt plans for realizing them.
Over the last five years, not less than 30 African countries have adopted new long-term visions and three to five-year plans for their realization. Institutions of development planning which had been dismantled or downgraded under the injunctions of the Bretton Woods institutions are being rebuilt and imbued with responsibilities for economic coordination.
Africa, it would seem, has entered a new season of planning and long-term development thinking. It is a season that has been boosted by the revival of efforts at regional cooperation and integration, efforts which have witnessed the design and implementation of multi-country economic projects that span various sectors and demand equally varying degrees of cross-border coordination.
It bears pointing out, however, that between the late 1950s and today, the world has undergone dramatic changes that mean that the contemporary context of planning is radically different from the earlier one. Rising to the challenges of the changes in context represents one of the historic tasks confronting today’s development planner in Africa.
Meeting this challenge will require a careful attention not just to the generation and sustenance of growth but also its nature and quality, the distribution of its benefits, and the tapping of opportunities for structural transformation. An opportunity for development practitioners, senior policy officials, senior policy researchers, and other African leaders to strictly look back past experiences and prospect future directions of development planning is more than timely.
Comments Off on 50 years of Development Planning in Africa: Retrospect and Prospects
A new era of development planning is emerging in Africa, says the new head of the UN Economic Commission for Africa, in this wide-ranging review. He gave this opening speech at the 50th anniversary conference of the African Institute for Economic Development and Planning (IDEP).
By Carlos Lopes
I am pleased to welcome you to the celebration of IDEP’s 50th anniversary. As many of you may already know, IDEP was created in 1962 specifically to strengthen the planning capacities of African countries. It is therefore fitting that the theme of this event is “50 years of development planning in Africa”.
Without a doubt, development planning is an important tool for anticipating and responding to emerging and current opportunities and challenges. And Africa, as we all know, faces multiple and diverse development challenges. Despite many of the challenges, Africa is presented with a unique opportunity to transform itself. Undoubtedly, the continent has achieved high and sustained levels of growth over the past ten years, resulting in what many have dubbed “Africa’s decade.” With appropriate planning frameworks and implementation mechanisms, the continent can surely transform and continue to grow its economies over the coming years.
In this regard, Africa must plan for development.
Development planning has a long and chequered history in Africa, and the continent’s development trajectory has been influenced by various approaches to development planning since the early stages of independence.
The first phase of development planning in Africa spanned the 1960s and was characterized by centralized planning with three to five year planning phases. During this period, at least 32 African countries had a national development plan. This first generation of development plans continued to the 1980s. These plans promoted state-engineered economies with resources allocated by governments. It was notably the time of state-owned enterprises operating in most of the productive sectors.
However, Africa’s development plans of the 1960s had limited success. This was due to a variety of reasons: deficiencies in the plan documents surely, but also failure to implement them; ambitious formulation of targets; institutional and bureaucratic weaknesses; exogenous shocks; and political factors.
The second phase in the evolution of planning in Africa was marked by a wholesale abandonment of planning under neoliberal Structural Adjustment Programmes (SAPs), which emerged in the 1980s-1990s with the support of the Bretton Woods Institutions. SAPs aimed to reduce the role of the State in production and service delivery and placed emphasis on macroeconomic stability, downsizing of public sector institutions, privatization and reducing government spending and budget deficits. The social cost of SAPs is a sad story. The downsizing of the public sector institutions and massive privatizations led to net job losses; the budget restrictions compromised social service delivery and human capital development; and most importantly SAPs failed to yield the envisaged growth outcomes as the annual economic growth for Africa over the 1990s averaged only 2.1 per cent.
These past experiences in planning alerted policymakers and decision-makers to the need to broaden the agenda of public sector reforms and to the importance of good institutions in the development process, especially in the new context of globalization.
In the early 2000s, SAPs were replaced by Poverty Reduction Strategies, which aimed at reversing the negative effects of a decade of Structural Adjustment on welfare and social conditions. PRSPs placed strong emphasis on poverty reduction and constituted a conditionality for debt relief. Many African countries embarked on at least two generations of PRSPs, mostly to ensure eligibility for debt relief. Notwithstanding the principle of ownership and consultations that underpinned PRSPs, they lacked credibility because of the externally driven nature of the process. Furthermore, PRSPs tended to place disproportionate emphasis on the social sector at the expense of the productive sector thereby raising questions about the sustainability of the poverty reduction agenda.
This brings us to the present day, where there has been an emergence of a new era of Development Planning in Africa.
In the last decade, there has been increasing interest in, and a return to, more comprehensive development plans that go way beyond short-sighted PRSPs. Indeed, many African countries have adopted long-term development visions and planning frameworks with far more ambitious growth and social development objectives.
National Development Strategies (NDS) have now gone beyond the narrow objective of poverty reduction to encompass objectives such as accelerated growth, employment creation, structural transformation and sustainable development. Unlike the 1960s, these plans employ a mix of state and market-based approaches and appreciate the critical role of both the public and the private sector in the development process. Many African countries have developed Long Term Visions to guide their steps towards these ambitious objectives. These long-term visions are characterized by stronger ownership from African actors and a more consultative and participatory process involving a broad spectrum of stakeholders, including Civil Society, the private sector, decentralized constituencies and development partners. These broader national development plans often take into consideration various global and continental development goals and frameworks such as NEPAD.
Challenges however remain. They include, ensuring credible consultation processes, prioritizing funding in line with development aspirations, coordinating donors, strengthening capacities to implement projects and programmes, and developing effective monitoring and evaluation systems that feed back into the policymaking process.
In short, more work is required to improve the planning frameworks in Africa in order to translate development aspirations and priorities into concrete results.
ECA is committed to support the strengthening of member states’ capacities to design, implement and monitor effective planning frameworks. To this end, the institution is undergoing a repositioning exercise that aims to better align its work with the priorities of the continent with the ultimate objective of promoting economic growth and structural transformation.
With the reemergence of planning as a continent-wide priority, IDEP will play a key role in capacity-building and assisting member states with their national development planning frameworks. IDEP’s capacity building efforts will be informed by rigorous analytical and policy-oriented research aimed at identifying and applying relevant cutting-edge planning techniques and experiences to the design, implementation and monitoring of planning frameworks on the continent. To this end, ECA has created a section called “Renewal of Planning” which will comprise a team of planning experts dedicated to conducting planning-related research.
It is important to add that IDEP’s mandate in the newly restructured ECA builds on a history of support to member states in the area of planning. In recent years, and on the basis of several country case studies conducted by ECA, we have developed trainings materials, and conducted a number of trainings on MDG-based planning tools and techniques.
In addition, between 2011 and 2012, ECA provided technical assistance to various countries including The Gambia, Togo, South Sudan, Djibouti, and Niger in the design, implementation and monitoring of medium-term development plans/strategies and long term development visions. We remain committed to strengthening our work in this area.
The effectiveness of national planning systems hinges largely on the quality and availability of data. Data informs the setting of priorities and facilitates the tracking of performance. ECA is cognizant of the data challenges faced by member states and is currently strengthening its institutional structures and processes to better support countries address their data challenges. Our statistical capacity will be multiplied by ten in one year. Our sub-regional offices will play an important role in this effort by according greater priority to the collection and assembly of credible data to support countries with their data needs.
Another important aspect is coordination. Coordination between ministries of finance and the ministries or entities in charge of development planning, among others, is likely to better link the planning cycles to those of the budget, therefore ensuring an effective implementation of the national development plan.
We can leverage our development planning capacities by developing mechanisms for peer learning and experience sharing. To support this effort ECA has developed a network of development planners which includes an electronic platform that will serve as a repository of literature of current research related to development planning. The platform will also include forums for discussion and exchange of ideas and experiences related to all aspects of planning.
Africa’s turbulent experience with development planning in the past is ceding ground to a more positive outlook for the future. Indeed, there are some good examples of success stories among African countries, which graduated from low income countries to middle income countries (Cape Verde, Ghana, Zambia, Botswana). In addition, some African countries, such as Ethiopia, Nigeria and Uganda have adopted long-term development visions and planning frameworks with far more ambitious growth and social development objectives and more detailed strategies and policies than those typically included in PRSPs.
Policymakers in Africa also recognize the importance of development planning, acknowledge the challenges involved in their execution and are committed to strengthening their capacities for effective planning. These commitments were reinforced during the 2011 Annual Conference of African Ministers of Finance, Planning and Economic Development, where policymakers reiterated the importance of strengthening national capacities for development planning in Africa. They also requested ECA to provide support to member states, the Regional Economic Communities (RECs) and the key regional organization, in developing national, sub-regional and regional development strategies. I can assure you that ECA will continue to support member states in this important area including in the areas of forecasting and conducting long-term projections and perspective studies.
Africa is at an exciting juncture in its development journey and is poised to become a new pole of global growth. To achieve this, however, Africa must continue to plan its development trajectory, increase policy space, and make prudent decisions about the appropriate strategies needed to achieve economic growth and structural transformation. It is indeed commonly said that failing to plan means planning to fail.
Our past and current experiences tell as that Africa does have several challenges in the area of development planning. But we also know that there are opportunities for strengthening the design, implementation and monitoring of national development strategies.
I will conclude by reiterating some key points.
Planning works and it has worked for many countries. It has worked for European, Latin American and East Asian countries. In fact, the experience of Brazil, India and China in reducing inequality and poverty and in embarking upon sound urbanization programmes provides important lessons in strategic and dynamic planning that requires our attention here in Africa.
Years of neoliberalism and structural adjustment and stabilization programmes and their dire economic and social consequences have prompted a renewed interest in development planning among African policy circles in recent years. This was further reinforced by the realization that economic success stories both across the continent, say Botswana, and East Asia have in large part kept a strong tradition of economic planning over the years. Furthermore, the ongoing global economic recession has shown the limits of market fundamentalism, having prompted widespread government intervention in the countries where you least expect such actions.
Planning works if it is strategic and carefully put together with good data and, more importantly, assiduously implemented. The Koreans will be the first to tell you that things did not always work according to plan but the difference is that they stuck with planning, changing things that didn’t work, making modifications when necessary, and above all, doing everything possible to implement their development plans.
For planning to work, African countries must address the problems of past failures and at the same time learn from the experience of successful countries both inside and outside the continent. Planners in Africa must understand the changing nature of planning in a changing global context that requires not only context-specific approaches but also plans that are dynamic and sometimes targeted to specific outcomes.
The countries that have re-embarked in planning for the longer term, if they are to join the ranks of advanced economies, will need not just good economic policies but strong and accountable institutions to support and implement them. They must also pay serious attention to the issue of financing development plans, especially given that in Africa the sources of finance will become increasingly domestic. They need to develop sound plans which are justified, effective and consistent with national vision and objectives, involving key stakeholders. A plan must meet the soundness test of coherence, consistency, effectiveness, which means that it must be founded on robust and credible evidence base, with clear mechanisms for implementation and monitoring and be reasonably flexible to deal with changing circumstances.
To this end, ECA will continue and indeed intensify its efforts to support the efforts of member States in developing, implementing and monitoring sound national plans to achieve economic transformation. To this end, we have reinforced IDEP to be able to address more adequately the capacity constraints faced by many Planning Commissions, Ministries and Departments in the continent through an array of capacity building programmes.
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After decades suffering from bad advice that led to the state having little role in the economy, African countries are reviving national planning and development strategies, learning from the Asian experience.
By Martin Khor
For many years after independence, developing countries made use of development planning as a major tool of getting their economies going.
But this stopped in the 1980s and 1990s for many countries, especially in Africa, that fell under the influence of the International Monetary Fund and the World Bank. Under their structural adjustment programme, planning or any kind of development strategy involving a leading role of the state was taboo.
As a result, many African countries fell behind in their economic growth and social development. Governments gave up planning, withdrew their leading role in the economy, cut jobs, gave up on subsidies and other methods of helping local firms and farmers. The new order was to privatise, liberalise imports and rely on foreign investments for growth.
For two decades or more, most African economies suffered from economic stagnation, while continuing to be mired in debt. The agricultural sector, that had been thriving in many countries, dwindled and many local industries were shut or reduced in the face of competition from cheaper imports.
This contrasted with East and South-east Asian countries, which had higher growth spurred on by an overall development strategy, with five-year plans and sectoral policies in industry, agriculture and selected services.
In some areas, especially in social services, utilities, infrastructure and strategic industries, the government retained ownership or high equity share. In other sectors it encouraged the development of local companies through subsidies, credit, sales promotion and sectoral road maps.
Today in Africa, there is a nascent revival of development planning and a growing role for the state in the economy, partly because of the lessons learnt from Asia.
This revival was the theme of a conference which I attended in January 2013 in Dakar, Senegal, to celebrate the 50th anniversary of the founding of the African Institute for Economic Development and Planning (IDEP), a United Nations organisation linked to the UN Economic Commission for Africa (ECA).
Regional leaders of Africa were present, as well as some Ministers and high-level economic officials of some 30 countries. All of them showed keen interest in learning the lessons of development policy and a revival of planning and a leadership role of the state.
The UN Under Secretary General and new head of the ECA, Carlos Lopes, gave an impressive overview of the ups and downs of planning in Africa.
In the 1960s, 32 African countries had planning and state-led economies, but planning was abolished in the 1980s and 1990s under structural adjustment programmes.
The many years of these policies and the limits of market fundamentalism have prompted renewed interest in planning, said Lopes. Many African countries are now developing plans and national development strategies, with targets for growth, jobs, and structural transformation and with a mix of the state and market, public and private sectors and long-term vision of ownership by Africans.
The ECA, which is the UN’s main organisation in the region, is itself supporting governments to revive planning and formulate development strategies. “Failing to plan means planning to fail,” said Lopes. Planning works if done well and implemented, he added, citing the successes and lessons of Europe, Brazil, China and other East Asian countries.
IDEP director Adebayo Olukoshi said in the last five years, over 30 African countries have adopted new long-term visions and three to five year plans. Institutions for planning that were dismantled are being re-built. “Africa has entered a new season of planning and long-term development thinking.”
In my speech, I highlighted various elements of development strategies in East Asia, that had guided the region’s growth. These include five year plans, economic transformation programmes (like the one in Malaysia), trade and industrial policy, promotion of local companies and farmers, the use of government procurement, and the new hybrid forms of government-linked enterprises combining some state ownership with increasingly commercialised operations.
The conference saw many Ministers or director-generals of finance and planning reflecting on the state of development strategies in their countries. Most had a common story, starting with the closing down or marginalisation of planning functions in the government as structural adjustment took its toll, with the state withdrawing its role in economic and social affairs.
The common story continued to the present more optimistic phase, with a few countries like Zimbabwe recently succeeding in reviving planning, and several others relating the difficulties and complexities of getting it going again.
“The planning capacity is lost. We must re-establish the capacities,” said one director-general. Others spoke of the need to overcome conflicts between different Ministries, especially the Finance Ministry and the Ministry of economy and planning, and to reduce reliance on the “external agenda” of donors and foreign financial institutions. “Without vision and commitment by the political leadership, nothing in planning will work,” was the summing up of another top bureaucrat.
The IDEP conference marked a stage in Africa’s development story. It seemed to me that the region has been suffering a long period of bad advice from international financial institutions, with loss of its capacity to develop its own economic strategies and development plans, and that a revival of long-term thinking and medium term strategies is now taking place. But it will still be a long road from this nascent revival to successful implementation.
A Special Summit of African Heads of State and Government was held on 25 – 27 May 2013 in Addis Ababa to commemorate the 50th Anniversary of the Organization of African Unity and the African Union. The following is an extract of the Opening Address by Mr. Hailemariam Dessalegn, Prime Minister of Ethiopia and Chairperson of the African Union.
By Hailemariam Dessalegn
Previous generations paid enormous sacrifices to liberate our continent from all forms of subjugation and restore the freedom and dignity of the African people. The major responsibility of the current and future generations of Africans is, therefore, to create a continent free from poverty and conflict and an Africa whose citizens would enjoy middle income status. I believe this is the new spirit of Pan-Africanism that should inspire current and future generations to fulfill the dreams of our Founders for a peaceful, prosperous and united Africa.
Africa’s Renaissance cannot be realized without bringing about a paradigm shift in our political and socio-economic governance. We all recognize by now that the policy orthodoxy imposed on us from outside to simply “get the prices right” did not help us to break the vicious cycle of poverty and achieve sustainable economic growth. Therefore, we have to do more than “getting the prices right” and play a proactive role in pushing forward our transformation agenda taking due cognizance of the nature of our respective political economies and development potentials.
In my view, there are five important measures that we need to take. First, we have to invest on the development of the agricultural sector, to transform our economies from the bottom up and lift millions of our people from abject poverty.
Secondly is the need to build human and technological capability. We cannot simply compete on the basis of our factor endowments. Hence, we need to assimilate technology developed elsewhere and move up the technology ladder.
Thirdly, we need to build infrastructure, a sector neglected over the past decades. Lack of adequate infrastructure is a difficult bottleneck, which arrests growth. We need, therefore, to undertake massive investment in infrastructure, establishing national and regional networks of roads, railway, telecommunication, electricity and other infrastructures.
Fourthly, when we say the state should play a proactive role, it does not mean that we need to stifle the private sector. On the contrary, we should get rid of the political economy of rent seeking and create a dynamic and vibrant private sector.
Last but not least, we need to nurture democratic governance and popular participation in order to create a favorable condition for the realization of our vision. We can ensure neither peace nor development in the absence of democracy and popular participation and inclusive growth.
Of course, we need the continued support of our friends and partners in our development endeavors. First and foremost, we seek their understanding on the need for us to have the policy space to design and implement our own development strategies based on the objective realities of our countries and drawing valuable lessons from other successful development experiences. We need the support and solidarity of our partners in all these endeavors, which means fulfilling commitments already made in various international fora. It cannot be over emphasized that we also need a favorable global environment particularly a fair trading regime, which is critical for boosting our economic growth.
I trust that this special occasion will afford us the opportunity to rededicate our efforts towards the socio-economic emancipation of Africa and renew our partnership with the rest of the world. It is my earnest hope that by the time Africa celebrates the centenary of the OAU/ AU by the year 2063, we will have achieved the dreams of our Founders for a peaceful, prosperous and united Africa.
