Reactions ranged from disappointment to expressions of betrayal and outright condemnation, seeing the outcome as an “affront to the poor.” Majority agreed that the conference was a failure in terms of the development goals promised by the WTO, and only served to support the status quo where developed countries benefited at the expense of the economies of least developed countries (LDCs).
The bad end of the deal
The deal arrived at in HK involved getting LDCs to agree to a development package which the Africa Trade Network (ATN) called “empty,” and led Oxfam International to condemn it as “unacceptable and reflecting rich countries’ interests.” It includes a provision for the “duty-free and quota-free” entry of LDC’s products into developed countries, but at the same time, provides rich countries with an escape clause for them to exempt key products which are of export advantage to LDCs, such as textiles, clothing, rice, and fishery products. In other words, “the LDCs can have market access for products they don’t produce at all or don’t market competitively, but access can be blocked for products in which they are competitive” (Khor, 20 December 2005).
Included in the package as well is an aid-for-trade deal in the form of loans which would increase the foreign debts of LDCs. Jubilee South, an international network of social movements and NGOs, called this a “bribe,” and “evidence of the extent to which rich countries can maneuver to perpetuate a World Order based on Debt (in the form of aid) and unfair and enslaving trade.”
In exchange for the “development package,” LDCs received the worst deal in services and non-agricultural market access (NAMA). Developing countries would be pressured to liberalise in 19 broad-ranging service sectors, undermining their right to choose which service sector to open and to what extent. This would open up more of their service sectors to foreign ownership and investments.
According to Jubilee South, the liberalisation of the General Agreement on Trade in Services (GATS) would “grant (global corporations) greater rights than citizens to exploit access (to markets and human services).” It would make such services “less accessible and affordable” and citizens would “bear the cost of adjustments required in privatisation and trade liberalisation.” The International Gender and Trade Network (IGTN) added that with the increased liberalisation of services, “access to (these)…cannot be guaranteed when profit maximisation is the bottom line.”
With the agreement on the use of the Swiss formula, all products of LDCs will be subjected to a tariff reduction formula. According to the IGTN and the Third World Network (TWN), this could lead to “rapid de-industrialisation leading to higher levels of unemployment.” It also means that there would be a huge loss in tariff revenues, on which many governments depend for earnings.
Betrayal of nations
According to NGOs, the developing countries were “bullied” into accepting the deal, as such countries did not want to be blamed for causing the failure of the conference. Without a “face-saving deal,” following the failure of previous ministerial conferences in Cancun and Seattle, the usefulness of the WTO in global trade liberalisation would have been seriously questioned. Oxfam International said that developing countries were “put in an impossible position (in HK): either accept a text which is seriously flawed, or be blamed for the failure of the round.”
Most LDCs chose to agree with the deal, giving in to the pressure exerted by two of their own, Brasil and India. According to Walden Bello of Focus on the Global South, both countries lobbied hard for LDCs to accept the unbalanced agreement. In effect, according to him, they betrayed and “sold out” their fellow developing countries in exchange for some market access in agriculture for Brasil, and services outsourcing for India. Leaders of an alliance formed in Cancun in 2003, Brasil and India served as power brokers in the negotiations, and with their delivery of the deal in HK, they became integrated into the WTO structure.
Developed countries, in exchange, finally agreed to the elimination of export subsidies by 2013, something which NGOs do not see as a big deal. It is in fact, “too late,” as it should have been eliminated years ago. According to TWN, developed countries extended it to 2013 “…so that they could extract more concessions from (LDCs).”
WTO was founded in 1995 to promote free trade and thus stimulate economic growth and reduce poverty in developing countries—a premise that various researches have disproved and trade activists have questioned time and again. Held every two years, ministerial meetings are the WTO’s highest decision-making body where decisions on how to move forward on any of the multilateral trade agreements are made.
Sources:
“The real meaning of Hong Kong: Brazil and India join the big boys’ club,” by Walden Bello, as posted 22 December 2005 at <http://www.tni.org/archives/bello/meaningofhk.htm>.
“Development lost in latest draft ministerial text,” by the International Gender and Trade Network, as posted 18 December 2005 at <http://www.igtn.org/pdfs/IGTN%20Draft%202%20Response.doc>.
“WTO ministerial outcome imbalanced against developing countries,” by Martin Khor, Third World Network, as posted 20 December 2005 at <http://www.twnside.org.sg/title2/twninfo339.htm>.
“NGOs criticize WTO’s Hong Kong outcome,” by Hira Jhamtani, Third World Network, as posted 19 December 2005 at <http://www.twnside.org.sg/title2/twninfo337.htm>.
“No ‘aid’ for unfair ‘trade,’ Jubilee South demands,” by Indira Endaya. Isis Onsite Reports. HK: Isis International-Manila.
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