The Report
of the Portfolio Committee on Trade and Industry on the visit to the World
Trade Organisation on 19 – 23 July 2010, dated 17 November 2010
The Committee having
visited the World Trade and Organisation, as well as other organisation,
reports as follow:
1. Introduction
While multilateral
rules are important, established rules are often imbalanced and prejudicial to
the developmental interests of developing countries. This requires reform of
current systems of global economic governance. The reform of global
institutions should be aimed at ensuring greater transparency and inclusiveness
in the workings and outcomes of these institutions. There is a growing
appreciation that the legitimacy and sustainability of these institutions is in
ensuring that the developmental interests of developing countries are advanced
as these regions will constitute the sources of global growth and prosperity in
the world economy.
Our world is changing
rapidly and there are profound and unmistakable shifts exposed by the recent
economic crisis that reveal a shift in global economic dynamics. There is also
a growing recognition that developing states and economies hold the key to the
future of developed countries.
In this globalising world
economy, the WTO has moved to centre stage in an evolving system of global
economic governance. The establishment of the WTO marked the emergence of a
strengthened rules-based international trading system that provides enhanced
certainty and security for market access. The WTO reduces the scope for
unilateral trade measures and aims to ensure that economic interactions,
including the resolution of disputes, are governed by a system of rules, and
not solely by the interplay of economic power. This is the essential
contribution of the WTO to global economic governance. Nevertheless, the
outcome of the Uruguay Round responded mainly to the concerns and interests of
developed countries. From the perspective of developing countries, WTO
agreements exhibit a range of imbalances and deficiencies that are prejudicial
to their trade and development interests. Further, the agreements, designed in
the main by industrialised countries, reflect the concerns of sophisticated
economies and presuppose an institutional, human and financial base that is
often lacking in developing countries.
The Committee’s recognition that
of
negotiations was based on assessment that negotiations opened up the
possibility to decisively address issues of development in the world trading
system. To achieve sustained global economic growth, developing countries must
pursue industrialization in sectors where they possess comparative advantage. Given
the Committee’s position crystallized after deliberating on the Trade Policy in
the first part of the year the Committee took a decision to go to
1.1
Developmental
outcomes developing countries want from
Processes and consequences of globalisation are
fundamentally altering the way countries integrate into the global economy
through trade[1]. The need
to achieve more balanced global trading relations, in the context of the Doha
Round of negotiations, is imperative if
Given
the issues under debate within the Doha Round – services, agriculture, intellectual property, new issues such as
investment, competition, trade facilitation, government procurement as well as a
focus on Africa and development issues – in preparation for the conclusion of
the Round it become imperative that the Portfolio Committee on Trade and
Industry meets its counterparts. This is to develop a common position around
these matters to secure a developmental outcome that would benefit the South-South
countries. Therefore capacity building for Members on WTO principles,
negotiations strategies and processes was imperative to ensure that Members of
the South African Parliament are able to formulate a position in preparation
for the final negotiations.
.
In light of the above, the
Committee’s Revised Strategic Plan for 2010/11 emphasised greater oversight
over trade negotiations and the implementation of IPAP2, as well as its
capacity building. Being a strategic committee, it must ensure that it is aware
of the progress and implications of all negotiations with respect to the World Trade
Organisation’s trade negotiations, as well as other bilateral or multilateral
trade agreements. This is to ensure a developmental outcome of the Doha Round of
negotiations.
Currently the WTO is in
the process of finalising preparation for the next round of
During the Committee’s recent
hearings on the South African Trade Policy and Strategic Framework, it expressed
the need that Parliament should be given adequate time to formulate and develop
a position that should be considered when the executive negotiate international
and regional trade agreements. A conclusion reached by the Committee was that
Parliament should consider reviewing its rules relating to how it processes or
deals with international trade agreements, so that Parliament is involved at an
earlier stage during the negotiation process. In this regard, Parliament would
need to allocate adequate resources for its involvement during the negotiation
process of international trade agreements.
Furthermore, the Committee
is currently processing the Intellectual Property Laws Amendment Bill [B8-2010].
During the initial engagement on the Bill, the Committee concluded that the
Bill is highly complex and that the Committee should proceed in processing it with
caution. There was also recognition that assistance from experts on
Intellectual Property laws and Indigenous Knowledge was required.
1.2 Preparation Process for
Study Visit
In light of the above and
in line with its strategic objectives, the Committee embarked on an extensive
engagement with the South African Trade Mission, as well as the World Trade
Organisation (WTO), South Centre and the United Nations Conference on Trade and
Development (UNCTAD), in
The following Members of
Parliament and the Secretariat participated in the study tour in
1.
Ms J Fubbs (ANC) – Leader of the delegation
2.
Mr B Radebe (ANC)
3.
Ms H Line (ANC)
4.
Mr X Mabasa (ANC)
5.
Mr N Gcwabaza (ANC)
6.
Mr S Marais (DA)
7.
Mr A van der Westhuizen (DA)
8.
Ms C Kotsi (COPE)
9.
Adv A Alberts (FF+)
10.
Mr A Hermans – Committee Secretary
11.
Ms M Herling – Content Advisor
12.
Mr L Mahlangu – Researcher
A report on the
interaction with the various organisations during our oversight visit follows
below. Section 2 provides a description of each of the organisations visited.
The inputs from the Committee’s engagements with these organisations are
incorporated in Sections 3, 4 and 5.
2. International Organisations visited
2.1 World Intellectual Property Organisation[2]
The World Intellectual Property
Organization (WIPO) is a specialized agency of the United Nations. It is
dedicated to developing a balanced and accessible international intellectual
property (IP) system, which rewards creativity, stimulates
innovation and contributes to economic development while safeguarding the
public interest.
WIPO was established by the WIPO
Convention in 1967 with a mandate from its Member
States to promote the protection of IP throughout the world through
cooperation among states and in collaboration with other international
organizations.
2.2 United Nations Conference on Trade
and Development[3]
Established in 1964, United Nations Conference on Trade and
Development (UNCTAD) promotes the development-friendly integration of
developing countries into the world economy. UNCTAD has progressively evolved
into an authoritative knowledge-based institution whose work aims to help shape
current policy debates and thinking on development, with a particular focus on
ensuring that domestic policies and international action are mutually
supportive in bringing about sustainable development.
The organization works to fulfil this mandate by carrying
out three
key functions:
·
It functions as a forum for intergovernmental deliberations, supported by discussions with experts
and exchanges of experience, aimed at consensus building.
·
It undertakes research, policy analysis and data collection
for the debates of government representatives and experts.
·
It provides technical assistance tailored to the
specific requirements of developing countries, with special attention to the
needs of least developed countries and of economies in transition. When
appropriate, UNCTAD cooperates with other organizations and donor countries.
In performing its functions, the Secretariat works
together with member Governments and interacts with organizations of the United
Nations system and regional commissions, as well as with governmental
institutions, non-governmental organizations, the private sector, including
trade and industry associations, research institutes and universities worldwide.
2.3 World Trade Organisation[4]
The World Trade Organization (WTO)
is the only global international organization dealing with the rules of trade
between nations. At its heart are the WTO agreements, negotiated and signed by
the bulk of the world’s trading nations and ratified in their parliaments. The
goal is to create a rules-based framework for producers of goods and services,
exporters, and importers to conduct their business. The WTO also administers
agreements and provides a dispute settlement mechanism for countries.
2.4 South Centre[5]
The South Centre was established
through an Intergovernmental Agreement (Treaty). It is an intergovernmental
organization of developing countries which aims to promote and enhance
South-South co-operation. Its establishment came as a result of a need to
organise and mobilise South-South expertise to develop a position to enhance
its bargaining power. Its core focus is to provide intellectual and policy
support required by developing countries for collective and individual action
in international fora.
According to Article II of the
Intergovernmental Agreement, the Centre has the following core objectives:
·
To promote South solidarity, South consciousness and mutual
knowledge and understanding among the countries and peoples of the South.
·
To promote various types of South-South co-operation and
action, South-South links, networking and information exchange.
·
To contribute to South-wide collaboration in promoting
common interests and co-ordinated participation by developing countries in
international forums dealing with South-South and North-South matters, as well
as with other global concerns.
·
To foster convergent views and approaches among countries of
the South with respect to global economic, political and strategic issues
related to evolving concepts of development, sovereignty and security.
·
To contribute to better mutual understanding and
co-operation between the South and the North on the basis of equity and justice
for all and, to this end, to the democratization and strengthening of the
United Nations and its family of organizations.
2.5 International Centre for Trade
and Sustainable Development [6]
Founded in
With a global
network of governmental, non-governmental, and inter-governmental partners,
ICTSD plays a unique, systemic role as a provider of original, non-partisan
reporting and facilitation services. ICTSD advances trade policy that supports
sustainable development by structuring interaction between policy-makers and
key influencers who are often excluded from policymaking processes. ICTSD helps
parties better understand the technical and political contexts that underlie
their interests and the interests of those with whom they interact on policy
issues. In this way, ICTSD builds bridges between groups with seemingly
disparate agendas, enabling them to identify and progress on issues where their
interests and priorities coincide.
ICTSD empowers
stakeholders in trade policy through information, networking, dialogue,
well-targeted research, and capacity building. It also identifies knowledge
gaps in international trade rule- and policy-making from a sustainable
development perspective; it mobilizes the best expertise around the world
through dialogue and research to address those gaps in a solution-oriented way;
it processes the knowledge generated through these processes so that it is
applied and relevant for international policy making processes; and it delivers
this knowledge to sustainable development constituencies in a timely manner.
To effectively
fulfill these roles, ICTSD has developed a reflective, responsive, and
opportunistic strategy. This three-pronged approach enables ICTSD to remain
ahead of the game and to anticipate policy developments. At the same time, the
Centre is responsive to external developments in its politically dynamic
environment and adapts its programmes accordingly. Finally, it is opportunistic
in exploiting strategic windows of opportunity in order to advance its mission.
3. Intellectual Property Rights Issues
Currently before the Committee is
the Intellectual Property Laws A/B [B8-2010] that seek to amend the Performers’
Protection (No. 11 of 1967), Copyright (No. 98 of 1978), Trade Marks (No. 194
of 1993) and Designs (No. 195 of 1993) Acts. During its initial engagement on the
Bill with the local experts, the Department of Science and Technology, the
Commission for the Promotion and Protection of the Rights of Cultural,
Religious and Linguistic Communities, and the Eastern Cape branch of Contralesa,
the Committee agreed that the issues are highly complex and that it would
require further engagement with local and international experts before it could
hold public hearings on the Bill. WIPO
was identified as one of the organisations it would like to visit to gain a
better understanding and insight on the protection of indigenous knowledge, as
well as the ICTSD.
During the
Committee’s visit in
The
session at WIPO focussed on the following:
·
The current challenges faced by WIPO.
·
The implementation of WIPO’s development agenda.
·
Work Programme on copyrights.
·
Work programme on Traditional Knowledge.
·
Trade Marks and Geographic indications.
3.1 Current
challenges faced by WIPO
Mr John Tarpey, Director of the
Communications Division: Global Issues Sector, briefed the Committee on the
functioning of WIPO and in particular the International Regime in Intellectual
Property (IP). WIPO is a treaty-based
organisation which administers 24 Intellectual Property Treaties. He informed
the Committee that the digital age brought new challenges for the intellectual
property regime with WIPO striving to meet the needs and expectations of all
Member States.
This requires an efficient IP system
that would encourage innovations and find solutions to the emergence of complex
issues. Critical for WIPO is to find creative ways to leverage innovation to
overcome problems associated with the current challenges faced by WIPO such as
climate change, public health and food security. What must be developed is a global IP
infrastructure that would address the needs of the IP system. The Developmental
Agenda of WIPO intensified efforts to facilitate the use of IP in developing
and least developing states.
3.2 Work
programme on Patents
Mr James Pooley, Deputy
Director-General of the Innovation and Technology Sector, briefed the Committee
on WIPO’s work programme on the Standing Committee on the Law of Patents (SCP)
with the key focus on the Patent Law Treaty. The SCP was established in 1998 to
negotiate the Patent Law Treaty (PLT) which was adopted in 2000.
In order to harmonise substantive
aspects of patent law, focusing on issues such as the definition of prior art,
novelty, inventive steps/non-obvious and industrial applicability/utility, the
drafting and interpretation of claims, and the requirement of sufficient
disclosure of an invention, opened discussions in 2001 on a draft Substantive
Patent Law Treaty (SPLT). Agreement remains elusive on negotiations with
respect to the SPLT with the resumption of its work in 2008 with the discussion
of a report on the international patent system. One of the issues under
discussion was the “exceptions from patentable subject matter and limitations
to the rights, inter alia research exemptions and compulsory licences[7]”.
The exception would facilitate the advancement of technical knowledge and
innovation that could help address public health needs in developing countries.
The ICTSD was of the view that too
strong IP Rules could stifle follow-up innovation and that too weak IP rules
would not act as an effective incentive for innovators and inventors. What is
required is a rich and vibrant public domain that promotes creativity and innovation.
The key is to find an appropriate
balance between private rights and public interest.
Public policy tension exists with
patents, and similarly with traditional knowledge, in terms of public interest
in both disclosure and not limiting access. Patents are a means of commercialising
technology-related innovation moving towards strategic innovation. Currently,
there are moves to open innovation that includes cooperation and partnerships, as
well as network innovation, that looks at problem-solving within a network.
3.3 Implementation
of WIPO development agenda
Mr Geoffrey Onyeama and Mr Irfan
Baloch briefed the Committee on the implementation of the developmental agenda
of WIPO. The agenda was approved in 2007 to incorporate a developmental
dimension and process of norm setting to consider development issues.
In the Committee’s engagement with
the ICTSD, views were expressed that the developmental agenda developed mainly
through two sources. Firstly, through pressure from non-governmental
organisations (NGOs) in the way patents were used to limit access to medicine,
and secondly, through a group of developing countries that recognised the
danger of the harmonisation and consolidation of regulatory authority over the international
patents system that would adversely affect their national interest[8].
The emergence of
During the Committee’s engagement
with the ICTSD, it purported that the IP is not an end in itself but a means to
promote creativity and innovation.
Currently, there are 45
recommendations for the Developmental Agenda which should get the buy-in of
both developed and developing countries to ensure mainstreaming of developments
in IP systems. This is also to promote a balanced IP system to promote
innovation, investment in research and development and the access to knowledge
and cultural goods.
In their engagement with the ICTSD,
the Centre identified a key role for parliamentarians in implementing WIPO’s DA
as well as IP laws within respective countries. Parliamentarians should:
·
Scrutinise the implications of new IP laws on public policy
objectives and human rights obligations in relation to the protection of the
environment and access to knowledge.
·
Ensure that national IP legislation takes advantage of the
flexibilities available to developing countries under international and
regional norms and that its cost does not outweigh its expected benefits.
·
Promote informed law making based on empirical evidence and
a diverse range of views on IP from different stakeholders (government, private
sector and consumers/civil society);
·
Solicit experts’ advice but ensure no conflict of interest.
·
Build in periodical reviews of IP legislation.
3.4 Work
Programme on copyright
Mr Richard Owens, WIPO, briefed the
Committee on the work programme of the Standing Committee on Copyright and
Related Rights (SCCR) which focussed on developing international norms and
standards in the area of copyright and related rights. He informed the Committee
that the SCCR is currently considering the protection of broadcasting
organisations and of audiovisual performances, as well as the expectations and
limitations, related to special needs individuals. This includes access to
content for visually impaired individuals, access by education institutions,
archives, and libraries.
Also included in the agenda of the
SCCR is how to define and measure the contribution of the “creative industries”
to GDP and employment. Defining “creative industries” remains a concern as
there is a large amount of employment and value-addition from creation to
consumption.
Development and proliferation of
digital technologies has brought to the fore the need to maintain the balance
between the protection available to rights owners and the needs of specific
user groups such as the visually impaired. Currently, audiovisual performances
are not included in the WIPO Copyrights Treaty, and the WIPO Performance and
Phonograms also known as the WIPO Internet Treaties. The development of best
practices for visually-impaired individuals is required to produce a new
digital version of the product.
With respect to who the copyright
belongs to, WIPO was of the view that the author would be the initial owner of
rights but in some countries a commissioned or employed author is not
considered the owner but rather the commissioner of the work. This can,
however, be limited to certain uses of the work. WIPO also informed the
Committee that no copyright exists beyond a certain timeframe but that the
rearrangement of work may give rise to independent protection.
3.5 Trade
Marks and Geographic indications
Ms Binayang Wang, the Deputy
Director-General of the Brands and Design Sector, briefed the Committee on the work
of the Standing Committee on Trade Marks, Industrial designs and Geographical
Indications (SCT). The SCT focuses on
the international development of the law of trademarks, industrial
designs and geographical indications, including the harmonization of national
laws and procedures.
Currently, WIPO is responsible for three
registers, which are:
·
The Madrid System for the International registration of
Marks, which allows a trade mark owner the possibility of having his/her trade mark
protected in several countries.
·
The Hague System for the international Registration of Industrial
Design provides a mechanism for registering a design in
countries and/or in intergovernmental organizations. It allows the owner
of an industrial design the possibility to have his/her design protected in
several countries.
·
The
Ms Wang informed the Committee that
the signing of the Singapore Treaty of Law of Trade Marks in 2006 harmonised
administrative rules for trade mark registration. This treaty also recognised
the different needs of developing countries by providing technical assistance
and other support to strengthen the institutional capacity of developing
countries.
Revenue earned through a trade mark
is returned to a member state but a sharp decline in registration of trade marks
has been experienced with a sharp increase in industrial design. Currently,
advanced work on industrial design and trade mark and the internet environment
is underway. The Madrid System is used in
3.6 Work
programme on Traditional Knowledge
Ms Olga Aguirre briefed the
Committee on Traditional knowledge (TK), genetic resources (GR), and
traditional cultural expressions (TCE). She informed the Committee that TK, GR
and TCE are economic and cultural assets of the indigenous and local
communities and their countries. WIPO focuses on the role that IP principles
and systems can play in protecting TK and TCE from misappropriation. Ensuring
that the necessary commercial benefits are derived from TK and TCE for the
indigenous and local communities is very important. Although existing standards
of IP may not protect TK, the evolution of IP may in future provide the
necessary protection to TK. Currently, IP has become a global issue that
affects many other areas including the challenge of domestic and international
coordination of IP.
The creation of the
Intergovernmental Committee on Intellectual Property and Genetic Resources,
Traditional Knowledge and Folklore in 2000 was to provide a forum for
discussion among member states on IP issues in the context of access to genetic
resources and benefit sharing, the protection of TK and the protection of
expression of folklore.
In his presentation, Mr Ahmed Abdel
Latif of the ICTSD highlighted the recent case against
The ICTSD, in their presentation to
the Committee, identified ongoing challenges in the protection of TK which are
as follows:
·
Recent cases of bio-piracy – two recent cases from
·
With respect to Pelargonium – A German firm filed a patent
which related to a method for extracting substances with medicinal properties
of Pelargonium. The patent was revoked after opposition from non-governmental
organisations.
Currently, there is no agreement on
the protection of TK given the examples of Rooibos and pelargonium.
4. United
Nations Conference on Trade and Development (UNCTAD)
UNCTAD is part of the United Nations
and focuses on research and policy analysis related to trade and trade-related
policies and focuses on developing countries. Programmes to assist developing
countries include training for areas such as managing customs borders, debt
management and investment policy frameworks. Work undertaken by UNCTAD is to
assist countries to integrate into the global system. UNCTAD is seen as an
alternative to the aggressive pro-market view of the traditional Bretton Woods
institutions.
UNCTAD is of the view that the
Millennium Development Goals (MDGs) refers to the minimum levels of development
but do not focus on the real issues for development. UNCTAD recognises the need
for an alternative development path and that the “business as usual” approach
will not deliver on MDG goals. To achieve the MDGs, the economic agenda of
developing countries should focus on the following:
·
Domestic resource mobilisation which require public as well
as private investment linked to the productive capacities of the economy;
·
Addressing inequalities and ensuring redistribution of
income;
·
Enhancing the developmental role of the State in achieving
employment and reducing inequalities; and
·
Developing policies supportive of international
architecture.
In response to a question by the Committee
with respect to the global economic architecture and how one could rectify the
current global imbalance, UNCTAD said that it would not abolish the existing
institutions but rather re-visit their original mandates and rules.
5. World
Trade Organisation
The Committee was welcomed by
Ambassador Faizel Ismail and one of the deputy directors-general of the WTO, Ms
Valentine Rugwabiza. Ms Rugwabiza highlighted that
Ms Rugwabiza welcomed the interest
shown by the South African Parliament to understand the functioning of the WTO
and the developments in the DDA. She shared that the role of parliamentarians
was recognised as ensuring that all stakeholders’ interests are taken into
account in the WTO negotiations. In this regard, WTO has been providing
parliamentarians with regular newsletters and there will be a joint activity
with IPU and WTO in November 2010 in
The sessions at the World Trade
Organisation (WTO) focused on the following areas:
1.
Overview of
2.
Agriculture negotiations.
3.
Non-Agriculture Market Access Negotiations.
4.
WTO Technical Assistance.
5.
Negotiations for Trade in Services.
6.
Development Issues in the
7.
Overview of the Trade-related Intellectual Property Rights
(TRIPS) Negotiations and the TRIPS and Public Health Agreement.
8.
Negotiations relating to Rules, including Regional Trade
Agreements.
9.
Roundtable Discussion with key ambassadors on the DDA.
These are discussed below in further
detail.
5.1
Overview of
WTO negotiations have two critical
processes or principles namely that negotiations are a single undertaking and
can only be concluded when consensus has been reached by all members.
Negotiations are held on the basis of transparency and inclusiveness. However,
the main negotiations and drafting of the text occur in smaller groups which
should be representative of the member countries.
The WTO negotiating structure
consists of the Ministerial Conference, which provides political direction; the
General Council; and the Trade Negotiations Committee, which establishes
different groups or bodies to negotiate on its behalf chaired by ambassadors.
The current agreements that are operating were agreed to during the Uruguay
Round.
The Doha Round was launched in 2001
to ensure that developing countries’ needs were met by focusing on
developmental issues. Most of the world’s economies (more than 153 countries)
are involved in the Doha Round negotiations. However, countries that are
waiting for accession are only allowed to participate in the negotiations but
not in the decision-making process.
The Doha negotiations cover 19 to 21
subjects including agriculture (including the cotton dossier), services,
industrial products under the Non-Agricultural Market Access (NAMA) dealing with
both tariffs and non-tariff barriers (NTBs), intellectual property (especially
a multilateral system for the declaration of geographical indications (GIs) for
wines and spirits), WTO Rules on anti-dumping, subsidies (including fishery
subsidies) and regional trade agreements, trade and environment, services,
trade facilitation, dispute settlement and electronic commerce. The following
issues and progress have been made under the key subjects:
·
Agriculture holds the key to concluding this Round. It covers
issues of market access; domestic support and export subsidies; flexibilities
for sensitive and special products (number of products and treatment of
products); cotton subsidies and food security. Most of the technical work is
completed and in the process of cleaning ten decision points.
·
NAMA deals with NTBs as well as industrial tariff
reductions; comparing flexibilities between NAMA and agriculture; sectorals
(creating duty-free sectors where tariff are cut below what is expected on a
voluntary basis; particular focus on certain emerging markets); and case
specific flexibilities including for
·
Services focus on fastest growing sectors, studies on
possible outcomes; market access using a country to country request and offer
approach; 71 members have made offers and there is a least developed countries
(LDC) waiver; and rule-making based on the General Agreement on Trade in
Services (GATS) including domestic regulation, emergency safeguard measures, government
procurement and subsidies.
·
Development considers promotion of economic development and
poverty alleviation; the Marrakesh declaration; recognition of LDCs;
incorporation of a development element at all levels; special and differential
treatment is currently not legally binding and effective (para 44) and is being
reviewed to become more precise, effective and operational. In addition, the
provision of duty-free, quota-free access of all LDC products to developing
countries; the requirement for technical assistance form developed countries
and secure and predictable funding.
·
TRIPS is focused on the legal effects of GIs for wines and
spirits where registration in a multilateral system is mandatory and the impact
in terms of fees for developing countries; extension of protection for other
products linked to GIs; review of article related to plant varieties; benefit
sharing and disclosure in biodiversity and traditional knowledge where the
origin of any genetic material used in an innovation must be declared.
·
Trade facilitation is a North and South issue. It focuses on
technical assistance; the release of goods and capacity to reform custom
systems. The group is in the process of reducing disagreements within the draft
text and is one of the areas that is advancing well.
·
Environment considers national coordination; a list of
specific environmental agreements/requirements that must be adhered to; regular
information exchange; granting of observer status; dispute settlement; the
reduction or elimination of tariffs and NTBs for environmental goods.
·
Rules related to anti-dumping; subsidies and regional trade
agreements (RTAs) are being negotiated. In terms of the RTAs, the transparency
of these negotiations; rules governing RTAs are not very clear, namely Article
24 of GATT 1994; Article 5 of GATS and the enabling clause are being
considered. There is much political sensitivity in this area.
·
The dispute settlement understanding is not part of the
single undertaking.
According to the WTO administration,
about 80 percent of the technical work is completed but political will is
required to conclude the Round. There is uncertainty about when the Round would
be concluded given the number of countries involved and the requirement for
consensus on a single undertaking. It is expected that the 2010 deadline will
probably not be met. The fact that the world has changed since the mandate was
determined in 2001 has dampened enthusiasm regarding the developmental agenda
of the Round.
5.2
Agriculture negotiations
The driving force behind the
agriculture negotiations is the political imperative to ensure food security
within countries. The ability to feed one’s nation and the moral obligation to
feed other nations when necessary requires policy choices by each sovereign state.
These policy choices range from food self-sufficiency to food security. The
difficulty with food self-sufficiency, namely producing all of the basic food
needs, is that a country needs to utilise resources that may not exist in the
country and could become very expensive. This may result in trade-offs from
productive uses to less productive uses, which may lead to lower purchasing
power. On the other hand, food security involves trade and the ability to
purchase food, which focuses on efficiently allocating resources to maximise
food security and purchasing power.
Countries that do not have a
comparative advantage in agriculture but persist to ensure food security
through self-sufficiency inhibit the ability of other countries, usually
developing countries, to exercise their comparative advantage in this regard
and this is the crux of promoting the DDA. The Uruguay Round began reductions
in export subsidies for agriculture, which set the stage for the DDA. However,
these reductions may not have led to lower farm support, as developed countries
have then shifted support into other structures that are WTO compliant. These
subsidies constrain developing countries from entering global markets through
tariffs and high domestic support.
The new agreement seeks to make the
agricultural trading system more level by reducing the impediments. Three
essential pillars are necessary to complete modalities, namely:
·
Trade distorting domestic support to be reduced. An 80
percent reduction by the European Union and restricting the
·
Increasing market access by lowering tariffs by 54 percent
in developed countries given certain flexibilities, e.g. dairy and movement of
livestock products. This will create greater opportunities; however, the
necessary logistics infrastructure for distribution is required to take
advantage of these possibilities.
·
Decreasing tariffs.
Agriculture is more important for
developing countries for social reasons than for developed countries. Political
difficulties are a constraint in concluding the text. Trade restrictions are to
be introduced to protect developing countries in special cases.
Other support for developing
countries to enhance development in agriculture could include Aid for Trade
where an agreement with a developed country is concluded to share technology
and skills and government support for the sector.
5.3
Non-Agricultural Market Access
The Doha Declaration of 2001 indicated
that the NAMA negotiations should focus on products of export interest to
developing countries as well as address tariff peaks and escalations and NTBs
on such products.
The 2004 July framework which the
Round from the breakdown in Cancun in 2003 further indicated that there would
be formula cuts, differentiated between developed and developing countries who
would receive flexibilities, while small vulnerable economies would do even
less and least developed countries would be exempted from any cuts at all.
At the Hong Kong Ministerial 2003,
additional flexibilities for small and vulnerable economies were agreed to, as
well as a adoption of the Swiss type formula. Also
In Hong Kong the NAMA11 group of
developing countries was formed with
In 2008, new text was developed
which included proposed conditional flexibilities for
The draft NAMA modalities that were Proposed,
but not agreed, in 2008 would result in cuts for South Africa in applied
industrial tariffs of 30 percent or more and 23 percent pf tariff lines – a
level of commitment greater than that required of any other member in any areas
of negotiation.
Moreover because of SACU these cuts
would apply to
The outstanding issues are the case
specific flexibilities for
5.4 WTO
Technical Assistance
In terms of WTO technical
assistance, developing countries are allowed the following assistance annually,
which is demand driven:
·
Two training sessions per developing country per annum and
three per LDC per year, which is requested through the relevant government
department.
·
Assistance to parliamentarians.
5.5 Negotiations
for Trade in Services
Trade in services are estimated to
constitute 70 percent of world GDP. Services have evolved from being produced
by governments to being commercially produced. This evolution has mainly been
because of technological advancement and globalisation. The purpose of GATS is
to institutionalise this transformation.
Four modes of supply of trade in
services are defined, namely cross border through telecommunications,
consumption abroad i.e. movement of consumer to the host country, commercial
presence i.e. the establishment of a company or legal entity within the export
market and the supply of a service through the presence of a natural person
that is temporarily residing in the importing country. Commercial presence
constitutes 50 to 55 percent of international trade in services.
The liberalisation of services under
the GATS refers to granting market access and national treatment (treating all
countries’ services sectors similarly to the domestic services sector).
Therefore, liberalisation cannot be done without regulation.
The GATS has a very flexible
structure in the sense that liberalisation commitments have been scheduled per
member per sector in accordance with its regulatory capacity and does not cover
air travel and government services. Liberalisation of trade in services would
be progressively done with individual countries determining their progress and
the conditions for the liberalisation per sector can be prescribed in their
schedules. Countries tend to liberalise out of self-interest beyond their WTO
commitments.
Competition is a key issue with
trade in services, as a sound domestic industry requires access to capital, the
latest technology and the knowledge to compete. Furthermore, the quality and
cost of the services chain determines an economy’s ability to access global
markets and its global competitiveness, as well as impacting on society’s
quality of life.
The following challenges are faced
in the domestic regulation of services:
·
Detailed and specific rules must be devised and defined
including licensing, consumer protection, ensuring competition, safety and
standards and minimising discretionary decision-making as an invitation for
corruption.
·
Dynamic regulatory framework is required.
·
Institutional framework must be appropriately selected,
independent and transparent.
In the Doha Round, negotiations are
conducted through a request-offer process on a bilateral basis. Individual
countries would target specific markets where that they have an interest in
through a request. The receiving country would then submit an offer based on
what it is prepared to allow. A signalling conference was held in 2009 with
Ministers indicating what improvements they could make but this cannot proceed
until the rest of the negotiations are concluded simultaneously.
5.6
Development Issues in the DDA Negotiations
Part IV of the GATT (General
Agreements of Tariffs and Trade) introduced the principle on non-reciprocity in
trade between developed and developing countries, while the enabling clause
adopted during the Tokyo Round gives preferences to developing countries and
among developing countries.
This has led to the special and
differential treatment (SDT) of developing countries, acknowledging the
differing abilities of countries to meet WTO obligations. SDT uses five
measures, namely measures to enhance market access; measures to safeguard;
allowing countries to use their policy space; allowing for extra time to
implement obligations and seeking to provide trade related assistance and capacity
building. In addition, LDCs receive further specific measures.
One of the key development issues is
access to markets. However, granting only market access without building
capacity will not increase trade flows for developing countries. Aid for Trade
financing was launched to address this, where the WTO facilitates the
partnering of donors and developing countries to promote assistance. Many of
the developed and now developing countries are aware of the importance of
assisting with the development of developing countries. New dynamic in terms of SDT including
insisting on financial assistance from developed countries before the
developing countries are willing to make certain sacrifices in the
negotiations.
The Africa Group dominated the 88
proposals to reform SDT. Proposals were categorised according to the most
appropriate committee that dealt with it or as being too divergent, which
should be dealt with elsewhere. Some of the proposals were that all developed
and developing countries are to give 90 percent of LDC products quota-free,
duty-free access; providing more information on SPS (sanitary and
phyto-sanitary) measures and import licensing; and the introduction of a
monitoring mechanism for the effectiveness of SDT as proposed by developing countries
or a platform to share experiences as proposed by developed countries. There
was also a proposal that SDT be integrated into other negotiating areas. Many
countries are already giving LDCs de facto access.
LDCs have called for an early
harvest, as they are most affected by the delays in the negotiating process.
However, the other members do not want to have an early harvest to ensure the
maximum political and moral support and momentum from all the developing
countries.
The work in this negotiating area
has been progressing slowly; however, there has been movement involving the
development agenda in other negotiating areas.
5.7 Overview of TRIPs Negotiations and the TRIPs and Public Health
Agreement
TRIPs is a vehicle to encourage
developing countries to raise their intellectual property standards. There is a
debate regarding the differences between types of innovations being created by
developed and developing countries and the way to protect these. One of the key
issues, namely the protection of traditional knowledge and genetic resources,
has mainly been protected at a national level as no international instrument
exists.
TRIPs does not refer to traditional
knowledge and was not meant to but it acknowledges the parallel development of
a broad approach to traditional knowledge and genetic resources because of the
Convention on Biological Diversity.
There is no international legal
definition of an innovation in patent law and this is open for individual
countries to define. There are working definitions for traditional knowledge at
the WIPO but this would need to be tailor-made for
Countries that have created
traditional knowledge protection legislation have also undergone a review to
determine the effectiveness of this. This process has to be iterative, as it is
a new area. The international arena can provide guidance but will not be
definitive.
There is a challenge with access and
benefit sharing for Convention on Biological Diversity. Negotiations are
underway regarding a new international regime to make this more enforceable and
an outcome is expected in October 2010. ‘Smuggling’ genetic resources and
commercialising this outside of a country may not necessarily be wrong unless
one is breaking the national law or breaching a contract. Thus, it cannot
necessarily be made a legal issue, but remains a moral or ethical issue. It was
proposed by developing countries that the rules regarding genetic resources
should be rewritten to compel the disclosure of the origin of any genetic
resources used in an innovation.
The proposed amendment to TRIPS
where one cannot get an enforceable patent without disclosing the origins of
the genetic material (patent system to monitor use of genetic resources) could
assist in enforcing national legislation beyond a country’s shores. Other
possible enforcement mechanisms are the international instrument(s) WIPO is
developing to define this activity as an act of misappropriation and making
this an issue of contract law, where a community allows use for personal use
only and commercialisation would constitute a breach of contract (mutual
understanding/contract that must be made enforceable internationally).
5.8
Negotiations relating to Rules, including Regional Trade Agreements
The negotiations on WTO rules cover
anti-dumping, subsidies (including fishery subsidies) and countervailing
duties, safeguards, Trade-related Investment Measures (TRIMS) and civil
aviation agreements, as well as rules for negotiations. WTO’s administration
deals with dispute settlements and provides a secretary and legal officer for
the negotiations.
In terms of anti-dumping
measures, 3 700 actions were launched by members since 2008.
The Rules negotiating group has
included subsidy disciplines (horizontal) and subsidies for fisheries in its
mandate. The “Friends of Anti-Dumping Negotiations” (FANS), which is led by
A subsidy is not necessarily
condemned by the WTO especially if it is for development purposes. Specific subsidies
aimed at an industry or group of companies may be prohibited especially if it
focuses or is issued based on exports. Subsidy programmes should be within the
WTO rules and should not be focused on export incentives and determined by
local content. It should also not have distorting effects. There are also
actionable subsidies, such as production subsidies, that may be challenged by
other members.
Fisheries subsidies are very
sensitive, as only 20% of world fish stocks are still healthy and their implementation
promotes overfishing. Challenges exist in developing disciplines to limit
overfishing, as fish do not honour national borders and it is difficult to
regulate these subsidies. Furthermore, not all catches are declared and one has
to consider the impact on subsistence fishers. In terms of catches, 71 percent
of developing countries responsible for wild catch and only 15 percent of catch
are within high seas and 85 percent within the exclusive economic zone. There
is a need to find appropriate SDT for developing countries and to develop Regional
Fisheries Management Organizations on high seas. In addition, political
decisions should consider the scientific data to ensure sustainability of the
world’s fishing stock while promoting development. The aim of addressing
fishery subsidies is to deal with large fisheries and overfishing as one of the
causes of stock depletion.
The draft text that was developed
towards the end of December 2007 was used as a starting point of negotiations
but there is much dissatisfaction with it. The second draft text was drawn at
the end of 2008. A roadmap for fisheries subsidies was developed and some
technical work to clarify anti-dumping measures for fisheries has been
conducted but is waiting for signals from the Agricultural Group and other
groups.
5.9
Roundtable Discussion on the DDA
Mr Chiedu Osakwe, the WTO Director
of Accessions Division, moderated a session with the ambassadors of
There was general consensus amongst
the ambassadors that most countries were in favour of the conclusion of the
Doha Round given a few changes with the exception of the
H.E. Mr Bhatia referred
to the dichotomy that existed between the WTO and the Doha Round of
negotiations, where the WTO was equated to the Doha Round but should be viewed
separately. The global economic crisis has highlighted the need for global
regulation. He noted that global trade has continued mainly uninterrupted
despite threats of protectionism. H.E. Mr Clarke attributed this to the fact
that the WTO rules did not allow member countries to reverse their
liberalisation without repercussion.
H.E. Mr Bhatia commented that
international rules and regulations are only relevant as far as they adapt to
changes. However, the WTO is unable to provide a platform for change because it
is being paralysed through regional trade agreements that are bypassing the
multilateral system. As WTO is limited by the Doha Round and is therefore not
in the position to respond to new issues such as climate change until the Round
is concluded. H.E. Mr Clarke was of the view that the Doha Round would be the
answer to the last ten years of economic changes.
He outlined that there had been
progress made in agriculture in terms of market access barriers. In NAMA,
progress had been made in terms of tariff barriers despite the need for
concessions for
H.E. Mr John Clarke
alluded to the fact that elected parliamentarians have direct impact on
determining international agreements as recognised through the Lisbon Treaty.
The WTO implemented international rules of trade, was a unique binding dispute
settlement and negotiation forum for the progressive opening of markets and for
determining strong international rules. He expressed that agreements
particularly in agriculture and services allowed countries to exploit their
natural competitive advantage and that the agreements offered a fairly
significant economic stimulus package. The Round could provide economic growth
and poverty alleviation given an equitable distribution of income. He emphasised
that there is a need for an element of give and take in the last stretch to
ensure the Round’s conclusion.
H.E. Mr Zhenyu Sun
commented that there has been great efforts and participation from all members
in the Round. However, many members may still be dissatisfied with what is on
the table but in spite of this there is a willingness to accept the package if
others would too rather than wait another three to five years for further
benefits. He expressed some dissatisfaction that the
H.E. Mr Darlington Mwape focused on
the impact of the Round on LDCs. He indicated that LDCs contributed 1 percent
to world trade but constituted 12 percent of the global population. This
reflected the existing economic imbalance. He stressed that a delay in the implementation
of the Doha Round would affect LDCs negatively. Therefore, he advocated for a
proposition to invoke the ‘early harvest’ principle to conclude the Round for
the poorer countries while these other important issues are being resolved. He
suggested that members should rethink whether the outstanding 20 percent of the
mandate should be completed or to design another Round for these outstanding
issues. Otherwise benefits for the LDCs would be delayed until the Round is
completed. He also noted that the Aid for Trade and the Enhanced Integrated
Framework programmes must continue effectively so that the productive sectors
of LDCs’ economies can be continually dealt with.
H.E. Mr Paolo Mesquita noted that
6.
International Centre for Trade and Sustainable Development (ICTSD)
The ICTSD is an independent
organisation established by civil society, governed by a board of trustees. It
focuses on sustainable development angel on trade with an emphasis on
developing countries. The ICTSD is of the view that Trade policy and the multilateral
trade system should support a country’s economic and social aspirations in
order to achieve its economic and social goals. It further aims to influence
trade bodies through dialogue and working with parts of the system.
6.1
Multilateral trade system
Mr Sergio Marchi briefed the
Committee on the Multilateral Trade System. He focused on the need for
developed countries to move on agricultural negotiations by dismantling the
substantial agricultural subsidies for their farmers as it distorts the market
place and disadvantages developing countries. Currently, the
The Committee expressed a view of engaging
their
6.2 Trade
and Climate change
Ms Ingrid Jegou briefed the
Committee on trade and climate change issues. The presentation focuses on the
internalisation of carbon cost and the support of low carbon economies. The
identification and classification of climate friendly goods within the WTO and
the agricultural link to climate change are issues that have an impact on
trade. The rising cost of international transport due to climate change has a
negative impact on LDCs and small island states.
7. Concluding Comments
The Committee, after its
deliberations on the “South African Trade
Policy and Strategy Framework: Discussion Document”, concluded that an
extensive study tour to broaden its understanding of key issues faced by
developing countries in the Doha Round of negotiations at the WTO should be undertaken.
Currently before the Committee is the Intellectual Property Laws Amendment Bill,
which is highly complex and required extensive interaction with key
role-players, both nationally and internationally. The Committee therefore
embarked on a study visit to the South African Trade Mission at the WTO, as
well as key organisations such as WIPO, the South Centre, the United Nations
Conference on Trade and Development (UNCTAD) and the International Centre for
Trade and Sustainable Development (ICTSD).
Currently, WTO agreements
exhibit a range of imbalances and deficiencies that are prejudicial to their
trade and development interests. Further, the agreements, designed in the main
by industrialised countries, reflect the concerns of sophisticated economies
and presuppose an institutional, human and financial base that is often lacking
in developing countries. Evident in our discussions with various organisations,
which included NGOs, is that a consensus exists around key issues pertaining to
the “Developmental Round” and that the delay to the conclusion of the Round could
be attributed to the developed countries.
In our discussions with specifically
WIPO and other organisations – the Committee became aware that a global
discussion on Traditional Knowledge and Intellectual Property - as a policy
issue - are underway. Furthermore, our engagement with these organisations
highlighted the complexities around intellectual property and that no common
framework exists on how to approach the debate currently happening on the
incorporation of Traditional Knowledge into Intellectual Property Laws
worldwide and specifically in
Other
conclusions:
7.1 The Director-General of the WTO,
as well as his Deputy, welcomed the interaction with parliamentarians and acknowledged
the value of engagements with lawmakers. Specifically both applauded the
Portfolio Committee for initiating the programmatic requirements of the Study
Visit which would in future be used as a format by the WTO to expand the
outreach programme with legislators and other institutions. Views were
expressed that such engagements with lawmakers of WTO countries could enhance
the workings of the WTO and that such engagements could contribute to the
completion of the Doha Round of negotiations. The views of legislators and
resolutions adopted by respective parliaments were essential in supporting a
country’s position.
7.2 WIPO welcomed the engagement
with the Committee and indicated that they are eagerly awaiting the outcome of
the current debate in
7.3 In the Committee’s discussion
with UNCTAD, UNCTAD was of the view that the Millennium Development Goals do
not focus on the real development issues and that an alternative growth path
should be pursued. To achieve this, policies developed in this regard should be
supportive of the international architecture. This view was not prevailing in
the Committee in our deliberations on Trade Policy and IPAP2. The Committee
noted the contribution that UNCTAD could make if developing countries utilise
the research capacity of the institution.
7.4 The Committee’s engagement with
the South Centre highlighted key challenges faced by developing countries in
the Doha Round negotiations. Developing countries’ cooperation at key
international fora would enhance the possibility of ensuring a developmental
outcome at the Doha Round negotiations. This could only be achieved through the
promotion of South-South cooperation that would enhance their bargaining
power.
7.5 During the Committee’s
engagement with the ICTSD, it became apparent that key experts in the field of
Intellectual Property were at the disposal of the Committee. The Committee’s
visit to WIPO did not provide sufficient information on Intellectual Property
and after a strategic engagement with the Chairperson of the ICTSD it was agreed that a workshop would
be arrange at minimum cost to Parliament. The workshop proved to further
enhance the understanding on Intellectual Property Laws, but highlighted key
challenges faced by the Committee with respect to key principles.
7.6 The Committee noted the
extensive focus on the WTO processes which has broadened its understanding of
the current debate in the Doha Round as well as the engagements with key
stakeholders in the field of Intellectual Property Laws that would only
contribute to the development of legislation.
7.7 The Committee noted the
presence/dominance of officials from various countries of the South at the
multilateral organisations and the influence it has on determining the trade agenda.
The Committee is of the view that recruitment of South African officials to
these multilateral institutions should be promoted and encouraged.
7.8 Arising out of the experience of
the Committee during the intensive study visit and the inclusion of the
committee secretary, content specialist and researcher, the Committee is of the
view that there is a need for such study visits in the beginning of every fresh
term with the inclusion of key support staff. Secondly, the study visit could
be expanded to include a focused cross cluster of committees such as Economic
Development, International Relations and Co-operation, and the related select
committees.
7.9 A recognition that greater
synergy should be developed between Inter-Parliamentary groupings and the
Portfolio Committee of Trade and Industry where appropriate.
8. Acknowledgements
The Committee wishes to thank
Ambassador Faizel Ismail and his staff for being instrumental in ensuring that
the Committee engage with important key stakeholders during this visit. Furthermore,
the Committee wants to express its deep appreciation to the Director-General of
the WTO, Mr Pascal Lamy, and his deputy, Ms Valentine Sendanyoye Rugwabiza, for
hosting the Committee as well as their contribution in developing a successful
programme.
Visits to the WTO, WIPO, UNCTAD and
the ICTSD contributed in broadening the understanding of Members with respect
to the issues at the WTO and on IP. The Committee also wishes to thank its
Committee support staff, in particular the Committee Secretary, Mr A Hermans,
the Content Advisor, Ms M Herling, and the Researcher, Mr L Mahlangu, for their
professional support and conscientious commitment to their work. The Chairperson thanks all Members of the
Committee for their active participation during the process of engagement and
deliberations and their constructive recommendations made in this report. The
strong cohesion within the delegation and their willingness to put
9.
Recommendations
Informed by its engagement with
various organisations, the Committee recommends that the House request that:
1. The Minister of Trade and Industry submits
a quarterly report to the Committee on the programmes and undertakings by the South
African Mission to the WTO.
2. The Department of Trade and Industry
considers the allocation of additional staff to support the South African
Ambassador to the WTO.
3. Closer engagement through the various
economic fora and regional structure, especially in
Report to be
considered.
[1] Tralac (Trade Law Centre for
[2] For additional information please visit WIPO at www.wipo.int
[3] For additional information please visit UNCTAD at www.unctad.org
[4] For additional information please visit WTO at www.wto.org
[5] For additional information please visit the Centre at www.southcentre.org
[6] For additional information please visit UNCTAD at www.unctad.org
[7] ICTSD, Policy Brief Number 7, March 2010
[8] Frederick M Abbott; The Political Economy
of the WIPO Developmental Agenda