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Note: This document is from the archive of the Africa Policy E-Journal, published by the Africa Policy Information Center (APIC) from 1995 to 2001 and by Africa Action from 2001 to 2003. APIC was merged into Africa Action in 2001. Please note that many outdated links in this archived document may not work.

US/Africa: Trade Wars, 2

Africa Policy E-Journal
June 29, 2003 (030629)

US/Africa: Trade Wars, 2
(Reposted from sources cited below)

As President Bush prepares for his trip to Africa from July 7-11, trade is high on the agenda. The official speeches during the trip are sure to tout the mutual benefits of trade, as host countries hope to gain additional access to U.S. markets. At the same time, however, U.S. and African agendas are diametrically opposed on most issues being considered by the World Trade Organization which will hold its summit in Cancun, Mexico in September.

This set of two e-journal postings focuses on key trade issues, by highlighting recent African statements as well as analyses from the Third World Network, a group that closely monitors global negotiations on these issues. In order to cover a range of issues, the e-mail version of these postings contains brief excerpts only (as non-technical as possible) from a variety of documents. More details can be found in the archived version of the postings (goto>) and in links to other websites.

Trade issues will also be among topics covered at a July 2 Briefing for White House Press Corps and other media "Heart of Darkness: The Truth about Africa Policy under the Bush Administration" []

Another posting for today contains (1) a speech by Mali President Amadou Toumani Toure, (2) a report by TWN Africa on the most recent African trade ministers' declaration. Below are excerpts from analyses on several other topics, including genetically modified food, patenting of life forms, and opposition to opening new negotiations on a WTO investment treaty,

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(3) Genetically Modified Food and African Trade

In the leadup to his Africa visit, President Bush has repeatredly attacked European countries for promoting hunger in Africa by discouraning African access to genetically modified food products (GMO) exported by the United States. Even apart from issues of safety and damage to local seed varieties, however, a new empirical study distributed by Third World Network - Africa discounts the claims of GMO agriculture proponents that their products contribute to increased food supplies.

The study by Aaron deGrassi, entitled "Genetically Modified Crops and Sustainable Poverty Alleviation in Sub-Saharan Africa: An Assessment of Current Evidence," evaluated GM cotton, sweet potatoes, and maize, in terms of their effectiveness and environmental sustainability under African conditions, particularly in Kenya and South Africa. He concludes that in these cases promotion of these crops is based not on evidence but on marketing by the leading producer Monsanto and its allies. See

For additional background on the U.S. trade challenge to Europe on genetically modified crops, see the Global Trade Watch report at On GM crops and hunger, see

(4) Patenting of Life Forms

African countries have taken the lead in arguing against the application of intellectual property rights to patenting life forms, and proposed alternate measures to protect rights to traditional knowledge and biological diversity. The Third World Network Info Service summarized new developments in the debate.

The full paper, distributed on June 11) is available on the website of the Third World Network ( Key excerpts on the African position are included here.

TRIPS (Trade-Related Aspects of Intellectual Property Rights) Council Debates Patents on Life, Traditional Knowledge and Article 27.3(b)

By Martin Khor, Third World Network Geneva, 6 June 2003

The World Trade Organisation's TRIPS Council on 4-5 June debated proposals on the three interconnected issues of the review of article 27.3(b) of the TRIPS agreement (dealing with biological materials), traditional knowledge and folklore, and the relationship between TRIPS and the Convention on Biological Diversity (CBD)....

The Africa Group reiterated its position that the TRIPS Agreement should be amended to prohibit patents on all life forms, as such patents are contrary to the moral and cultural norms of many societies. It also stressed that the requirement to protect plant varieties should not in any way undermine but support Members' rights to public goals such as food security and poverty elimination. There is thus no basis to require Members to adopt inappropriate regimes for plant varieties protection.

It proposed that the WTO adopt a Decision on Traditional Knowledge which would establish a WTO Committee on traditional knowledge and genetic resources to oversee the protection of traditional knowledge and enforcement of rights of WTO Members.

The Group expressed concern that the review of TRIPS Article 27.3b has not been finalized and that the deadline of December 2002 set at Doha had passed. Protection of genetic resources and traditional knowledge will not be effective unless international mechanisms are established within the TRIPS framework. Other means, such as access contracts and data bases for patent examination, can only be supplementary to such international mechanisms which must contain an obligation on members collectively and individually to prohibit and prevent misappropriation of genetic resources and traditional knowledge.

"Patents on life forms are unethical and the TRIPS Agreement should prohibit them through modifying the requirement to provide for patents on micro-organisms and on non-biological and microbiological processes for the production of plants and animals. Such patents are contrary to the moral and cultural norms of many societies in Members of the WTO." ...

On possible areas of agreement, the Group wishes that delegations confirm a common understanding on the following:

  • Members have the right and freedom to determine and adopt appropriate regimes in satisfying the requirement to protect plant varieties by effective sui generis systems. Such regimes may draw upon the ITPGR, the CBD, UPOV 1978 and the Africa Model Legislation on protecting local communities, farmers and breeders and the Regulation of Access to biological resources. Systems of protection should address local realities and needs. The Africa Model Legislation and Regulation of Access is one example of a sui generis system which was developed to protect the rights and knowledge of farmers, indigenous peoples and local communities, in a manner suiting the circumstances of Africa.
  • The non-commercial use of plant varieties and the system of seed saving and exchange as well as selling among farmers, are rights and exceptions that should be ensured as matters of important public policy to ensure food security and preserve the integrity of rural or local communities.

While the legitimate rights of commercial plant breeders should be protected, these should be balanced against the needs of farmers and local communities. Any sui generis system should enable Members to retain their right to adopt and develop measures that encourage and promote the traditions of their farming communities and indigenous peoples in innovating and developing new plant varieties and enhancing biodiversity. ,,,

  • Traditional knowledge and inventions of local communities should be protected. It is important to develop international mechanisms ensuring equity in the use of genetic resources and traditional knowledge through appropriate international arrangements to supplement domestic laws and measures.
  • Genetic resources and traditional knowledge should be documented to assist searches and examining novelty and inventive step.


On areas of disagreement, the Africa Group proposes the following:

  • Patenting life forms: The Group maintains its reservations about patenting any life forms. It proposes that "Article 27.3(b) be revised to prohibit patents on plants, animals, micro-organisms, essentially biological processes for the production of plants or animals, and non-biological and microbiological processes for the production of plants or animals." ...
  • Misappropriation of genetic resources and traditional knowledge: Such misappropriation has taken the form of obtaining patents in developed countries inconsistent with the will of the communities and countries that have sovereignty over the resources.

The Group paper noted efforts such as developing access contracts and databases for patent offices (used to examine patent claims for novelty, inventiveness and usefulness) that are being undertaken in WIPO but considered them inadequate as these do not amount to effective international mechanisms. ,,,

Where any invention is derived from traditional knowledge or based on in situ genetic resources of any member, then no intellectual property rights shall be granted in any member unless CBD requirements have been fully complied with. Members shall require in their laws that any IPRs granted in breach of this Decision shall be cancelled forthwith. No IPRs shall be granted without recognition of the traditional knowledge involved. ...

TWN Info Service on WTO Issues (June 03/5) 13 June 2003

NGOs Voice Opposition to WTO Investment Negotiations

by Kanaga Raja, Geneva 10 June 2003

A new global investment agreement proposed for negotiations at the WTO could inflict lasting damage on the livelihoods of poor people in developing countries, says a new report by the UK-based development agency ActionAid.

In its report "Unlimited Companies" released here Tuesday, ActionAid said that an investment agreement at the WTO would carry huge risks for the world's poorest people and called on the EU to drop its insistence on such an agreement.

[The ActionAid report is available on the ActionAid website at:]

It also recommended that in the run-up to the Cancun Ministerial, developed countries should not attempt to persuade developing countries to trade off their interests with regards to investment in the hope of gaining in other areas such as agriculture.

Instead of a WTO investment agreement, the international community should support the establishment of a binding international regulatory framework on multinational corporations, outside the WTO, that will strengthen the ability of developing countries to manage foreign investment to benefit the poor.

The ActionAid report was released just as the WTO Working Group on the Relationship between Trade and Investment (WGTI) is holding its final meeting here on 10-12 June before the 5th Ministerial in Cancun.

At a press briefing on 10 June, three other other non-governmental organizations Third World Network, the Center for International Environmental Law (CIEL) and the International Union of Foodworkers joined ActionAid in calling for a stop to efforts and pressures towards a WTO investment agreement.

According to the NGOs, the WTO members have been divided in their views on virtually every issue that has been discussed at the WGTI. They said that it was clear that no consensus exists on if or how to approach the issue of whether to begin negotiations on investment.

Steve Porter, lead attorney for CIEL, said, "At the beginning of the final scheduled meeting of the WGTI, we are of the view that in moving towards Cancun, there does not appear to be any consensus, let alone an explicit consensus, on how to move forward on investment negotiations at the WTO."

Peter Rossman of the International Union of Foodworkers, representing 12 million workers in 142 countries, said that in the international labour movement there is a divergence of views on the inclusion of an investment agreement at the WTO but a consensus exists that the current proposals within the current framework at the WTO must be opposed.

Rossman explained that many global trade unions under the Global Unions Group, had taken a joint position that investment agreements should exclude provisions on expropriation and national treatment as they limit the scope to pursue development strategies. "The current proposals at WTO fall far short. As things stand, we cannot support trade ministers in Cancun giving a green light to commencement of negotiations on investment at the WTO."

Goh Chien Yen of the Malaysia-based Third World Network said that NGOs around the world have been voicing their demand that negotiations on investment not begin in the WTO. He said that at the discussions in the WGTI, it was clear that there has not been agreement among the WTO members, nor has the "clarification of issues" mandated at Doha been adequately carried out.

This lack of agreement applies to all the issues, including on scope and definition of investment; whether the
non-discrimination principle should apply in investment, development considerations; and how disputes should be settled.

Since this is the final meeting of the WGTI before Cancun, it is important to recognise that there is a lack of convergence of views on these different elements of a potential investment agreement and that insufficient work has been done on the implications for developing countries.

He highlighted a divergence of opinion even on the most crucial issues of scope and definition. Some developed countries have been asking for a very broad definition that includes not only FDI but also portfolio investment, whereas the developing countries have been demanding that the definition be kept narrow. Given the experience of developing countries with financial instability, a very broad definition of foreign investment could lead to financial difficulties in these economies.

Many countries have questioned whether the WTO is an appropriate forum for an investment agreement. They have argued that the application of the WTO principles of national treatment and MFN may be useful for trade in goods, but is inappropriate and should not be extended to investment which is a different entity altogether.

He pointed out another area of disagreement: some countries like India, Pakistan, Kenya, and China have proposed that the discussions should cover the obligations of foreign investors and their home governments, but this has been rejected by developed countries on the basis that this is not part of the clarification process.

Given the present state of disagreements, there is simply no basis for a decision to be taken by explicit consensus in Cancun to start negotiations on a prospective investment agreement" Goh maintained.

John Hilary of ActionAid, the author of "Unlimited Companies", said that the report is based on new case studies from a range of countries around the world, including Uganda, Haiti, Thailand, Mozambique, South Africa, India and Brazil.

He said foreign investment can be a powerful force for good, citing clothing factories in Bangladesh, China, Cambodia and Lesotho where investment has created meaningful developmental change by providing jobs, particularly for poor women.

On the other side however, Hilary said, "we are equally struck from research around the world of examples where foreign investment had not been a force for development or a force for good."

The ActionAid report says that the case studies examined demonstrate that foreign investment can also cause great damage to the rights and livelihoods of vulnerable communities, for example, in Brazil, Uganda, Haiti, Thailand and India.

In Thailand, a Udon Thani concession to mine potash in a 85,000 hectare area that was granted to a Canadian-based company Asia Pacific Resources has raised fears among villagers and experts over the local environment (the mine is expected to generate about 20 million tonnes of salt waste) and on the rice crop on which 32,000 people depend.

In Plachimada, in Kerala state, India, a Coca-Cola bottling plant was set up in 1998. Coca-Cola's average extraction of 350,000 litres of water per day from its new deep wells has severely depleted the local communities' water table, leaving villagers with acute water shortages and environmental contamination, the report points out.

In Brazil, meanwhile, 90% of the corn seed market has been taken over by 4 multinationals, with 60% of the market controlled by Monsanto alone. Similarly, in its dairy sector, Nestle and Parmalat control more than 50% of the market in the late 1990s. In Minas Gerais state, prices fell by 50% and 70,000 poor producers had to stop supplying the largest companies between 1996 and 2002.

Hilary said that these examples are "on top of what we already know of the economic risks of foreign investment particularly where you have local producers who are exposed to competition from far greater multinationals."

"At the macroeconomic level, if China is taken out of the equation, over half of all foreign investment to developing countries is not 'greenfield' investment i.e. most productive new plants, but are in the form of mergers and acquisitions."

"We believe that the multilateral investment agreement that is proposed by the EU, Japan, Korea and others threatens developing countries, particularly the poorest communities in those countries, because it risks having further liberalization of investment in the same way we have seen in the damaging case studies in the report."

Hilary highlighted two threats arising from this agreement. Firstly, it threatens to open up the sensitive sectors of the economy that have been deliberately kept closed such as agriculture in Thailand, India and Ethiopia, and particularly in terms of food security.

The second threat comes in areas that are already open to foreign investment because the policies that developing countries use to maximize the development benefits of investment could well come under attack, as has been seen in services liberalisation under the GATS.

Pro-development policies taken by developing countries such as joint venture requirements or equity caps on investors coming into the country as well as performance requirements can come under thereat at the WTO.

The ActionAid report reiterates that one lesson from the GATS negotiations is that developing countries can indeed be pressurised to open up new markets to foreign investors, even when it is not in their interest to do so.

Another lesson from the GATS is that even though key WTO members may try to protect key development policies by registering them as limitations to their liberalization commitments, those policies are targeted for removal by other countries in negotiations at the WTO.

Developing countries have had their key development policies targeted for removal by other countries in the current round of GATS negotiations, including joint venture requirements and equity caps in countries such as Indonesia, Pakistan, and Thailand, among others.

The report also counters the EU claim that an investment agreement at the WTO will be in the best interests of developing countries. This claim does not stand up to examination, as the proposed agreement will not increase investment flows; the WTO principle of non-discrimination or national treatment is not development friendly; developing countries will be overburdened with another set of complex negotiations on top of the Doha work programme; and the proposed agreement does not address the needs of poor communities.

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Date distributed (ymd): 030629
Region: Continent-Wide
Issue Areas: +economy/development+ +US policy focus+

The Africa Action E-Journal is a free information service provided by Africa Action, including both original commentary and reposted documents. Africa Action provides this information and analysis in order to promote U.S. and international policies toward Africa that advance economic, political and social justice and the full spectrum of human rights.

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