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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
http://www.africafocus.org/docs03ej/chr03.php>) and in links to other
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,
(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.
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 (http://www.twnside.org.sg).
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
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
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
On areas of disagreement, the Africa Group proposes the
- 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
- 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 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
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
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
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
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
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
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
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
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.
Date distributed (ymd): 030629
Issue Areas: +economy/development+ +US policy focus+
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