World Trade Organisation Negotiations: briefing

Meeting report

TRADE AND INDUSTRY PORTFOLIO COMMITTEE
24 May 2006
WORLD TRADE ORGANISATION NEGOTIATIONS: BRIEFING

1 & 2

SUMMARY
The Department of Trade and Industry met with the Committee to provide an update on progress in trade negotiations. Detail was provided on New Partnership for Africa’s Development implementation strategies and African economic development strategies. Integration of regional economic communities was a key development. Information was conveyed on the Southern African Customs Union-USA and Southern African Development Community-European Union trade negotiations. Recent developments in the World Trade Organisation negotiations were outlined.

Members asked numerous questions including the role of the US Congress in monitoring negotiations, the definition of sensitive products in agreements, impact of trade negotiations on the lives of the poor, the lapse of the US Trade Negotiating Authority, the existence of a common South African negotiating position and the need to enhance capacity in trade negotiating teams.

MINUTES
Department of Trade and Industry (DTI) presentation
Mr X Carim (Chief Director-Trade Negotiation) provided background information on latest developments in the World Trade Organisation (WTO) negotiations, New Partnership for Africa’s Development (NEPAD) initiatives, the Southern African Trade Negotiations and the trilateral co-operation agreement between Brazil, India and South Africa. Progress reports on various working groups were outlined. Detail on NEPAD implementation strategies was presented.

Discussion
Prof B Turok (ANC) noted the tactic of the United States negotiators to blame Congress for any delays or obstacles to progress. He asked why the South African Parliament did not adopt the same approach. The relevance of the WTO as the appropriate venue to negotiate important trade agreements was questioned. Political issues tended to dominate proceedings that hindered the development of meaningful partnerships. Reference was made to a recent trade agreement between Venezuela, Cuba and Bolivia that opened their respective markets to tax-free trade in terms of a barter system.

Dr P Rabie (DA) asked what products were involved in the recent agreement between Mercosur and the Southern African Customs Union (SACU). Clarity was sought on internal differences within SACU that inhibited trade promotion.

Ms F Mahomed (ANC) asserted that trade negotiations had to have meaningful impact on the lives of the poor in order to be effective. Clarity was sought on the definition of sensitive products. The concept of "less that full reciprocity" had to be explained. She asked when a seminar on Renewable Energy Resources would be held.

Mr L Labuschagne (DA) noted the heightened development position of South Africa in relation to partners within SACU and asked what impact this distortion might have.

Mr S Rasmeni (ANC) asked what implications the lapse of the US Trade Negotiating Authority (TNA) would have on the negotiating process. He asked whether South Africa possessed its own negotiating mandate. The negotiating process had to include the positions of provincial and local government to ensure the inclusion of all regions and sectors.

Mr Carim stated that the United States employed an extensive procedure to reach negotiating mandates. Studies, public hearings and wide-ranging consultations took place. South Africa should improve its own consultative mechanisms to strengthen its negotiating hand. The economic power of the US meant that a specific framework was imposed on developing nations with minimal opportunity for adjustments. Developing states tended to make comprises in order to gain access to developed world markets. Various goodwill statements had been made to South Africa post 1994, but trade negotiations were highly technical with limited benefits. Few African states were subject to tariffs that reduced the benefit of lower tariffs. Alternative trade agreements should be considered such as that achieved in South America. Mercosur tended to focus on agricultural products. A number of agreements existed within one area simultaneously that tended to complicate matters. States could only belong to one customs union.

Mr Carim said trade policy discussions were held at the National Economic Development and Labour Council (NEDLAC) on a monthly basis. Key stakeholders debated important issues and formulated negotiating mandates. Sensitive products were identified in NEDLAC. "Less than full reciprocity" was an established principle within the WTO. Less developed countries had reduced obligations as opposed to developed states. The key was to find the middle ground within the G20 in terms of sensitive products and other issues. A balance was needed between industrial and agricultural products in terms of increased market access. The lapse of the US TNA could have serious implications for developing states. Various trade forums such as the Agricultural Trade Forum were involved in formulating the South African mandate. Provincial governments should be informed on a regular basis of developments in trade negotiations. The link between trade liberalisation and poverty had not been clearly established. More studies were needed to ascertain the impact of trade on the poor.

Ms T Hartzenberg (Director-Trade Law Centre) argued that trade could contribute to meeting development needs. The challenge was to achieve policy co-ordination and devise appropriate rules of trade. Rules could inhibit or facilitate trade. States could also display defensive tactics that could infringe on potential agreements. Regional developments were a key aspect of trade arrangements. The objective was to attain a common external tariff. A common understanding of development was needed within partnership agreements. Certain industries would lose competitive advantage due to adjustment costs arising from trade negotiations. Benefits should flow to all member states within the SACU. Adequate capacity was needed within government departments to drive the process. The implementation of trade agreements was a complex process that would impact on existing regulatory authorities. Information had to be conveyed to potential beneficiaries of trade agreements to ensure understanding of the resultant changes in practice.

Dr M Sefularo (ANC) asked whether examples of other state systems could be studied to improve the regulatory role of Parliament with regard to trade negotiation and policy formulation. He suggested that capacity development programmes should also focus on the production of trade negotiation skills.

Ms D Ramodibe (ANC) asked whether SACU was the oldest customs union in the world and proposed that modernisation might be necessary.

Ms Hartzenberg stated that the trade agenda was constantly expanding and the relationship between DTI and other departments was important. Technical expertise in the negotiating team was vital. Constitutional requirements should guide the formulation of legislation. SACU was the oldest customs union that comprised a common revenue pool. The source of revenue was important for smaller countries’ budgets. A new development within SACU was the creation of a common industrial policy that would impact on the regulatory environment. Smaller countries would have to develop sound regulatory frameworks. Trade law capacity was important in trade negotiations and an interdisciplinary approach was recommended.

Mr Carim stated that the constitutional framework would guide how Parliament related to the negotiation process and maintained oversight over developments. The US Congress monitored progress in negotiations on a continuous basis. The negotiating position was achieved after vigorous debate and the TNA defended it unambiguously. The European Union used a more flexible approach to reach a mandate. Trade agreements had to return to the South African Parliament for ratification. Negotiators had to consider implementation challenges when formulating strategies. Capacity was needed at all levels of government to implement agreements effectively. A constant pool of experts was required to achieve optimal results.

The Chairperson stated that the Committee would make use of experts to keep abreast of developments and assist in oversight responsibilities.

The meeting was adjourned.