What the Government are saying about the Trade Justice Movement 

The Secretary of State for Trade and Industry, Patricia Hewitt and International Development Secretary, Baroness Amos have sent MPs briefing material on the Trade Justice Movement and a letter for all Labour MPs to send to their constituents who raise trade justice issues with them. The content has also been sent to all MPs prior to a cross party briefing. We republish the letter here with some comments from the Trade Justice Movement.

Generally, whilst we welcome some positive aspects of the briefing and letter, the government still rejects our core demand of dropping their push to force an expansion of the WTO’s powers into areas of new issues such as investment. The Trade Justice Movement believes that the government’s priority should be to resolve the existing inequities in the world trade system.

The Trade Justice Movement, which through over 40 member organisations represents over 9 million ordinary people in this country, cannot see the government’s claim to share the Trade Justice Movement’s objective of making trade work for the world’s poor as anything other than rhetoric whilst this policy on investment and the other new issues remains part of the government’s position.

We hope the comments below within the letter sent out to MPs are both helpful to the supporters of the Trade Justice Movement as well as MPs and the government.

The Trade Justice Movement is campaigning for trade justice – not free trade – with rules weighted to benefit poor people and the environment. The government’s response shows that they are still wedded to a free trade/liberalisation agenda that will limit poor countries’ ability to manage trade for development and the environment.

The government has also not responded to the Trade Justice Movement’s Six Arguments Against an Investment Agreement at the WTO.

• There is no evidence that a WTO investment agreement will increase investment in poor countries.

• A WTO investment agreement is very likely to reduce the ability of governments to manage investment so that it works to reduce poverty.

• Poor countries do not have the capacity to research and negotiate on four new issues. The priority for the WTO should be to make existing rules work for poor people.

Standard letter to constituents  (first sent to MPs 17 June 2003)

This Labour government firmly agrees with the Trade Justice Movement that trade rules must be improved to benefit the poor. 

[We welcome this commitment however there are significant differences between the government and the Trade Justice Movement over how to achieve this aim]

We are in no doubt that the current system does not work for many developing countries so we need to do more to help all developing countries secure better access to rich country markets…

[Many members of the Trade Justice Movement support improved market access to the North, but this is not our main demand. The Trade Justice Movement is campaigning against expansion of the WTO agenda and the forcing open of developing country markets.]….

The World Bank estimates that eliminating all barriers to trade in goods would generate an extra US$250bn – 620bn in global income, up to half of which would go to developing countries.  In terms of poverty reduction, this could lift over 300 million people out of poverty by 2015.  That is why the Government is ambitious about pursuing the development agenda for the current round of trade talks launched at the 4^th WTO Ministerial Conference in Doha, Qatar in November 2001

[Claims about the potential benefits of eliminating barriers to trade need to be treated with extreme caution. The economic models that are used to support such assertions are based on a set of assumptions that are wild abstractions from the way real-world economies work. The UK government should not force upon developing countries blanket trade liberalisation regimes that do not work for sustainable development. The great danger is that liberalisation in developing countries could impact catastrophically on poor people. Some properly regulated and gradual liberalism may bring benefits to some countries. Yet is hard to assert with any confidence that any gains will actually go to poor people.]

But despite sustained pressure from the UK and other countries, progress in the Doha round of negotiations has been disappointing to date, especially on the issues that matter most to developing countries, such as agriculture and TRIPS and public health.  We are working closely with our Cabinet colleagues, as well as within the EU and internationally, to secure a successful outcome to the 5^th WTO Ministerial in Cancun, Mexico this September.  We are committed to making sure that the Doha round delivers real benefits for the world’s poor.

[The question is how will this be achieved? The Trade Justice Movement believes that the Doha round will only benefit poor countries if the inequities of world trade are resolved. The WTO should certainly not be opening new negotiations on issues where there is very significant disagreement as to what the benefits will be.]

We need to tackle distortions in global trade created by the current structure of our domestic support regimes for agriculture, coupled with subsidised exports of agricultural products, where many of the poorest countries have a natural trading advantage.   The OECD spends $310 billion every year to support its agriculture sector, roughly the same as sub-Saharan Africa’s GDP.  Now is the time to turn that support to a more sustainable and environmentally friendly model for our own rural communities, rather than by continuing to rely on a 50 year old system that often leads to overproduction, requiring further taxpayer subsidies for exports and higher prices for our consumers.  EU citizens provide €45bn of taxes to fund the CAP and a further €50bn from their pockets to buy more expensive products.  This situation is not only morally bankrupt, but also economically and environmentally unsustainable. We cannot preach fair trade abroad while practising protectionism at home.

[All good points, that's why the Trade Justice Movement wants the government to concentrate  on  reforming agreements such as on agriculture and not to divert its attention to new issues]

We need to resolve the outstanding issue on access to medicines and public health.  We are continuing to engage with US and key developing countries to meet our Doha promise to make intellectual property rules flexible enough to help developing countries meet public health problems before Cancun.  We regret the delay in agreeing a solution.  But we are working hard to resolve this issue as it will help maintain developing countries’ trust in the WTO.

So, our priorities for Cancun are to secure ambitious reductions in agricultural support and ensuring that the rules which govern intellectual property are flexible enough to ensure that the world’s poorest countries can meet the challenge of public health problems like HIV/AIDS.  We are working in partnership with the relevant NGOs to deliver these aims. These are our priorities because the potential gains for the developing world are greatest in these areas.

No “New Issues”

The main focus of the Trade Justice Movement’s “No New Issues” campaign is that there should be no expansion of the WTO negotiating agenda to include the so-called “new issues” of investment, competition, trade facilitation and transparency in government procurement.  The Government, however, believes that appropriate agreements on these issues would have potential benefits for developing countries.

[they don't seem very convinced about this, and quite right too – The Trade Justice Movement  believes the costs far outweigh any benefits of including these issues in the WTO.]

For example, a framework agreement on competition would help developing countries tackles the anti-competitive practices of big international and domestic cartels.  Basic rules on transparent procedures in government procurement will help promote good governance and reduce corruption.

Most NGO concerns focus on the proposed WTO framework agreement on investment.   There is no doubt in our minds that more investment is critically important for developing countries if we are to meet the Millennium Development Goals and enhance poverty reduction.

[We agree. Our problem is not with investment per se, which clearly is needed. The government seems determined to confuse arguments over investment with including investment rules in the WTO. Education and a functioning police system are also important to development, but we hope the government will not therefore propose they should be regulated by the WTO!].

Foreign direct investment not only provides additional capital, but also helps to transfer new technologies and skills as well as generating employment.

The evidence shows that foreign direct investment tends to go to countries with a record of good governance and that businesses are more likely to make investments if a country has clear and transparent regulations.  A new multilateral framework could provide such clarity and security for investors, but of itself is no guarantee that foreign direct investment flows will increase to developing countries.  For example, a country that is politically or economically unstable will not attract foreign investment, regardless of whether or not a multilateral framework is in place.

The development benefits of a multilateral framework will depend on the details of the agreement.  There has been debate on what the framework of a potential agreement should look like, but at present no decisions have been made on its structure or content.  The UK Government is working with the European Commission, as well as with the Trade Justice Movement …

[No it isn't. This is factually untrue. We have meetings and exchange papers, but the Trade Justice Movement opposes the whole idea of including investment in the WTO, so how could we work with the government on such a framework?],

… to ensure that any proposed framework supports the interests of developing countries.  We recognise that the Doha round covers a wide variety of issues, challenging the negotiating capabilities of many developing countries.  Our assessment of the potential benefits of agreements on the “New Issues” will be weighed up against the potential costs of their negotiation and implementation.  

[But will the government also take into account the potential costs in terms of the limits this will place on countries’ environmental policies and strategies for development?].

Crucially, the Government would not sign up to something we did not believe to be in the interests of developing countries overall.

[The crucial point is not what our government thinks the developing countries need, but what people in the developing countries themselves think they need. We risk falling into a 'nanny knows best' situation where we claim to have a better understanding of developing countries' needs than their own governments and civil society! The fact is that most developing country governments oppose negotiations on new issues and there is a broad-based coalition of organisations across the developing world that opposes expansion of the WTO.[1]]

We are also clear that by promoting the interests of developing countries we will simultaneously benefit UK business. Greater prosperity around the world can lead to new markets for UK companies, wider choices and lower prices for consumers and lower input prices for businesses.

More details of the Government’s key policy commitments on trade and development, as well as the new round of multilateral trade talks, are set out in the White Paper, Eliminating World Poverty: Making Globalisation Work for the Poor in Chapter 5 on ‘Capturing Gains from Trade’.  If you or your constituents would like more details the White Paper and copies of the Government’s Trade Matters background briefs are available at www.globalisation.gov.uk  and www.dfid.gov.uk or from DFID’s Public Enquiry Point on 0845 300 4100.

(Letter ends)