Department of Trade & Industry on World Trade Organisation Negotiations: briefing

Meeting report

ECONOMIC AND FOREIGN AFFAIRS SELECT COMMITTEE
26 August 2003
DEPARTMENT OF TRADE & INDUSTRY ON WORLD TRADE ORGANISATION NEGOTIATIONS: BRIEFING

Documents handed out
WTO, South Africa and DOHA Development Agenda Powerpoint Presentation

SUMMARY
The Chair said that most members had now resumed after the oversight work that took them to the Limpopo province. The Department Director of Trade Negotiations with the World Trade Organisation informed members that work on the World Trade Organisation negotiations had been ongoing but regretted that the Committee had not been carried aboard this process. He hoped that the presentation would update members on the important multilateral negotiations where South Africa was playing an active role.

MINUTES
The Committee heard that daggers were drawn in readiness for the Fifth World Trade Organisation (WTO) Ministerial Conference to be held in Cancun Mexico in mid September. The Committee further heard that the talks were expected to be very tense due mainly to the failure by developed countries to honour pledges they made at the Doha Conference.

World Trade Organisation: Negotiations
Mr Francis Moloi, Director: Trade Negotiations with WTO, Department of Trade & Industry gave a brief introduction of the WTO and noted that South Africa participated in the World Trade System with a view to address the legacies of apartheid and uneven development among other concerns. South Africa's objectives in Doha were to ensure that developmental issues were at the centre of the WTO agenda and the multilateral talks. This active participation on the part of South Africa was aimed at addressing the existing imbalances in the WTO and to strengthen the rules based world trading system. One of the main challenges South Africa was faced with was developing negotiating positions through effective consultation with likeminded stakeholders. South Africa boasts relative strength in the WTO hierarchy owing to its sound economic base and sufficiently developed institutions. He noted that the Cancun meeting was essentially a midterm review that would take stock of developments to date and to give ministers an opportunity to provide guidance on the way forward.

Discussion
Mr Bhengu (IFP) admitted that he was not well grounded in the WTO dynamics but wanted to know how developing countries would manage to push through their agenda when the whole multilateral structure was based on the North-South economic divide.

Mr Moloi agreed that at the moment developed countries largely set the WTO's agenda but that in the past five years there had been a shift to ensure third world's full participation.

Ms Nkuna (ANC) asked how these talks were going to address the destabilising effects of the continued dumping of subsidised products in the domestic market.

Mr Moloi concurred that indeed anti-dumping rules were skewed in favour of developed markets and that this was one of the issues to which developed countries would seek clarity.

The Chair asked what exactly hinders the full participation of Africa countries in this important processes.

Mr Moloi explained that at the inception of the General Agreement on Tariffs and Trade (GATT) was viewed as an exclusive club for rich nations. In fact only the Union of South Africa together with the then Rhodesia were the only countries from Africa that had membership in the nascent organisation. Many African countries were fearful of joining the organisation but started registering membership only on the prompting of the UN development program. He also cited lack of industrial diversity as one of the limiting factors for African countries, which was coupled with a limited capacity to fully engage issues at the WTO talks.

The Chair asked what was being done to address the debilitating handicap that hampered African countries' participation in the multilateral processes.

Mr Moloi revealed that since 1998 there had been a significant shift in the multilateral processes in that increasingly developing countries were getting restless and seeking to set not only the agenda but also to dictate the pace of the process. This new turn-around came about as a result of developing countries' gaining an understanding of the WTO's workings building on strong negotiating coalitions.

Mr Bhengu asked what role, if any, that Nepad would play in advancing the African agenda in the multilateral processes.

Mr Moloi replied that indeed Nepad offered a unique opportunity for African countries to for the first time put development matters on the trade talks agenda. This was a huge challenge for South Africa in driving the process.

The Chair asked why it had been difficult for African countries to coalesce their interests and approach the multilateral negotiations with one accord.

Mr Moloi said that due to their diverse levels of development and economic structures it was almost impossible for African countries in particular and developing countries in general to take a common stand but that these countries wanted to approach the talks with one objective.

The Chair blamed the inferiority of African products to obsolete technology, which tended to make production very expensive and hence rendered them uncompetitive in the international market.

Mr Moloi concurred with the Chair's sentiments and pointed out that many developing countries had been calling for the transfer of technology from developed countries to no avail. He noted that the other problem with developed countries' markets was that the more products are processed the higher the tariff regime confronted.

The Chair contended that Europe had a different season from that of South Africa and other African countries. Why would Europe want to maintain a high tariff regime when they were in need of these products?

Mr Moloi admitted that seasons were significant in shaping tariff escalation and the non-tariff barrier regime depending on whether the market was ready to absorb these products or not noting that it was clearly a self-serving measure.

Mr Bhengu enquired if the non-tariff barrier regime was in any way affected by trade liberalisation.

Mr Moloi said that the process of trade liberalisation fanned the growth of non-tariff barriers in that with tariffs coming down fast countries fell unto the latter to protect their markets. The EU market was controlled by the will of very powerful lobby groups that ensured that their concerns were addressed by the governing regime.

Ms Nkuna said that experience had shown that exporting oranges was far more profitable than manufacturing juice and wanted to know why this was the case yet South Africa was desirous of building a strong industrial base.

Mr Moloi agreed with this assessment and noted that what renders export of industrial products expensive was the stringent standardisation requirements placed in the way to the developed countries' markets.

Mr Setona (ANC) asked what the balance of forces was like between developed and developing countries and whether this alignment was in a position to change the current unfair trade terms.

Mr Moloi said that it was difficult to quantify the current balance of forces but noted that with the new powerful entrants like China and the increasing influence of developing countries like Brazil it was most probable that developed countries would listen to the voices of their developing counterparts.

The Chair said that civil society had of late proved to be a force to reckon with in matters of public interest and wondered what role, if any, this sector played in the multilateral talks.

Mr Moloi said that the Civil Society was part of a broader stakeholder consortium from whom the Department had conversed for views during its preparatory processes.

The Chair referred to Mr Moloi's assertion that some datelines set at the Doha meeting had not been met and wondered whether the Cancun meeting would achieve its objectives or indeed it would turn out to be another Seattle.

Mr Moloi predicted that the negotiations would be very tough. Participants were preparing themselves accordingly. He however assured the Committee that South Africa was ready for the meeting.

The meeting was adjourned.