Geneva, 14 Sep (Chakravarthi Raghavan) -- Five years after establishment, the World Trade Organization has failed to deliver on its key promises, and a new Millennium Round cannot be supported by consumers, until crucial changes are made in how, and for whom, the WTO and its trade liberalisation agenda operates, Consumers International (CI) declared here.
Trade liberalisation agreements reached in 1993 at the end of the Uruguay Round and the establishment of the WTO in 1995 to manage their implementation, promised much but have failed to deliver many of the anticipated benefits.
"Before any 'Millennium Round' negotiations are begun, the weaknesses of the existing regime must be reviewed and put right," the CI report said.
The CI which in 1993 was used by then GATT Director-General Peter Sutherland to mobilise "consumer" support for conclusion of the Uruguay Round Negotiations, has now delivered a highly critical report and says that the WTO agreements and their implementation has threatened fundamental consumer rights and led to an
unbalanced distribution of the potential benefits of expansion of world trade.
In a report titled, "Consumer Rights and the Multilateral Trading System: What Needs to be done before a Millennium Round," the CI, representing 247 consumer organizations in 111 countries, says that while the WTO was set up to promote sustainable consumption and raising living standards throughout the world, by encouraging and regulating trade in the global market place, in the implementation of the agreements some of these commitments have been disregarded, and the interests of the transnational corporations have been favoured, often at the expense of the most vulnerable consumers in the poorest countries.
The CI called on the WTO to reconsider the action needed to achieve its original goals, and to ensure that consumer rights are given equal status with business interests.
The action is needed, said the CI, because:
preliminary evidence from around the world shows that consumer rights are being undermined by the multilateral trading system through clashes between governments of nation states and the TNCs. Where TNCs have problems exporting because of a country's consumer protection laws, for e.g., they use the threat of action through the WTO to intimidate governments to bypass or change their laws.the poor implementation of the trade liberalisation commitments by the industrial countries has resulted in an unequal distribution of benefits from the WTO-based regime.There has been an unequal distribution of benefits, reducing in many countries access to essential goods and services such as food and healthcare to the people, while increasing "the global concentration and market power" of large transnational corporations.
This has tended to reduce competition and therefore choice and value for money for consumers, rather than increasing it, and undermining the basis for consumer support for trade liberalisation, the CI said.
Until the agreements are reviewed, and redressed, said the CI, consumers could not support further trade liberalisation and new agendas and issues.
The Seattle Ministerial Conference should launch an objective review of the implementation of the Uruguay Round agreements with a view to identify what aspects of the current agreements need to be amended to obtain the broad benefits promised in the preamble to the WTO agreement.
An objective review process would be transparent and open to genuine consultation with civil society - both in the formulation of the scale and methodology of the review and in the conduct of the review itself. Such a review should address the WTO's impact on consumer rights.
A briefing paper on consultation and transparency at the WTO, distributed with the report, said that a strong incentive for the (current) secrecy at the WTO is that it provides cover for special interests to come into play.
"The business community has acknowledged that it is more than happy with the current access to the work of the WTO and would not want greater access for others. This suggests a hidden agenda for retaining the status quo. The unbalanced distribution of benefits of the Uruguay Round are testament to what happens when
all interests are not represented equally."
Trade liberalisation is only a means to satisfying consumers.
Satisfaction of basic needs - access to basic goods and services necessary for survival, such as food, water, energy, clothing, shelter, health care, education and sanitation.
Consumer rights also require among others:
safety - protection from hazardous products, processes and services by banning dangerous goodsinformation to enable informed consumer choicerepresentation and advocacy of consumer interests,redress and compensation against misrepresentation.But the experience of the past few years shows that the implementation of WTO rules has threatened these fundamental consumer rights and led to an unbalanced distribution of potential benefits of the expansion of world trade.
Listing several areas where the operation of the WTO rules has resulted in reduction of consumer rights, the CI report said:
"Trade rules negotiated at the WTO are increasingly affecting domestic regulations and, indeed, the ability of governments to regulate to ensure effective consumer protection.
"In addition to this, the cost of the WTO dispute settlement mechanism means that resource-poor countries cannot fend off attacks on domestic regulations which protect public health, but are perceived by transnational companies as a hindrance to developing their business."
As an example of the unbalanced implementation, the CI report said that though industrialized countries claimed they had reduced average tariffs from 6.3 to 3.5 percent, closer examination showed that tariff reductions were insignificant in real money terms, do not apply to products of export interest to developing countries, and the average tariffs on goods from developing countries are relatively higher than on those from
industrialized countries.
The maldistribution of benefits of the world trade has resulted in an unequal gains for consumers with the poorest suffering the most -- about one fifth of the world population has been excluded from the growth of consumption.
Although consumption is an essential means to human development, not all consumption has the same value. The starting point must be those areas of consumption that are essential to achieve basic capabilities to live long, healthy and creative lives.
The WTO trade liberalisation has not benefited all producers equally. The dismantling of national trade barriers has favoured TNCs who are better placed to benefit from increased market access. Their ability to shift production and investment around the world gives them an edge over domestic firms and smaller
companies. Indeed many of the smaller producers are being put out of business or taken over by the TNCs, the CI report charged.
The TNCs are the driving force behind globalisation -- generating 70% of world trade and 80% of all foreign direct investment, with majority-owned mergers representing nearly three-fifths of global FDI in 1997, a rise from just one half in 1996.
These mergers have been made possible by the WTO trade liberalisation and deregulation and have concentrated key industrial sectors -- such as pharmaceuticals, telecmmunications, banking, insurance and agro-chemicals. There is greater industrial concentration in the hands of a few firms in each industry - usually the TNCs.
There is unequal power within the WTO, and practical measures to address the de facto dominance of the WTO by the most powerful economies should be formulated, in keeping with the intention that the WTO should provide a negotiating forum in which each member country carries equal weight.
The Seattle Ministerial Conference should launch an objective review of the operations of the Uruguay Round agreements with a view to identifying what aspects of the current agreements need to be amended to obtain broad benefits promised in the WTO preamble, the CI report said.
The current international trade regime is failing to deliver on its potential. A judicious and proactive regulatory role for governments in a market-based global economy is necessary to ensure that the tool of market economics is applied most efficiently for the promotion of the objective of sustainable
development and social justice.
On the food security issue, the CI report said no further agricultural liberalisation should be required by developing countries until a full impact assessment of the Uruguay Round on food security has been carried out. The assessment should focus in particular on the least developed countries and the poor consumers in net food importing countries.
In particular, the role of the large agro-chemical transnational companies in controlling food production and the impact this has on food security must be examined. A review of the implementation of the WTO rules may support the case for a food security clause to be added allowing governments to take appropriate measures to protect food security.
Export subsidies used by industrialized countries to compete with agricultural exports of developing countries should be eliminated as they are a threat to the food security of consumers in developing countries and a form of unfair competition.
The CI report also demanded that public health, rather than commercial interests, must have priority in implementation of the WTO agreements, in particular the TRIPs Agreement.
Flexibility must be allowed to enable access to essential drugs, and parallel imports and compulsory licensing policies must be recognized.
On competition, the CI that before introducing competition rules in the WTO, the international anti-competitive and restrictive business practices of TNCs -such as transfer pricing and other intra-firm manoeuvres should be tackled. There should also be international mechanism to control and review the increasing number of cross-border mergers, acquisitions and alliances that lead to monopoly and dominant market positions.
Abuses of trade measures like anti-dumping, subsidy and countervailing investigations and measures, safeguards etc that dilute the impact of trade liberalisation should also be addressed.
The CI report also came out against further liberalisation of services now covered by the GATS, and said existing GATS rules must first be modified to safeguard consumer rights and establish suitable regulatory mechanisms. There should be no progressive liberalisation of services until there are effective consumer
protection laws.