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[page number of print ed.: 36]


SESSION 4: NEW ISSUES


4.1 OPPORTUNITIES FOR ZIMBABWE AND ZIMBABWE’S CONCERNS IN THE NEXT WTO ROUND:
Dr. R. Monro, Africa Resources Trust

Dr. Munro begun his presentation by unveiling that although environmental concerns are provided for in the rules of the GATT administered by the WTO there were persistent and increasing calls to include trade and environment issues in a proposed new Round on negotiations beginning after the Seattle Conference. These included formal proposals or communications, notably from the European Union, United States, Norway and Switzerland, for environment-related issues to be included on the Seattle agenda itself.

The issue of Trade and Environment in the WTO regime, and the issue of trade liberalisation and environmental conservation in general, is fundamentally characterised by a superficial analysis and corresponding misunderstanding of the relationship if any between international trade and environment. Further, it reflected the absence of a truly multidisciplinary approach to the issue, but one which was fragmented into trade „experts" and „environment" experts but few general ‘experts’. This Trade and Environment debate, which was growing in intensity and controversy and threatens to erupt into battle in Seattle, is by and large informed by an assumption that trade liberalisation is intrinsically detrimental to the natural environment – that international trade and environment conservation are mutually exclusive.

Dr. Munro noted that whilst proponents of trade liberalisation do indeed defensively argue that trade can benefit the environment, either through generating export revenues for environmental conservation or leading to development which places less demand on the environment, these arguments do not reflect the general treatment by the WTO of the trade and environment issue. This also despite the fact that there is no record of a species having gone extinct as a result of international trade in its specimen or products. On the contrary, however, there was evidence of wild species which have been saved from extinction or increased in population as a direct result of opening controlled trade in the products or specimens of those species – the Nile crocodile in Zimbabwe is one such example

On the other hand, the real potential for poverty alleviation – the corollary of economic development and the priority for DCs and LDCs – lies in the fact that the bulk of biological resources and diversity not only lies in rural areas but largely in those rural areas characterised by human poverty associated with extremely limited economic opportunities and low productivity from conventional land use practices, such as agriculture.

Indeed, some 90% of biodivesity on the African continent are to be found outside officially Protected Areas such National Parks. The irony of landscapes encompassing biodiversity richness alongside extreme human poverty is not only obvious but provides both a challenge and an opportunity for many DCs and LDCs. The challenge is to acknowledge and promote the management and use of biological resources – including commercial use of species and genetic resources – as a legitimate land use.

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In turn, this requires policies, which encourage sound natural resources management and sustainable use practices by landholders and landowners in all tenurial categories – State, Private and Communal.

For rural communities what was essentially required to ensure such commercial use of their biological resources was environmentally sustainable, was that they be provided with tenurial security through secure property right over their land and the natural resources upon it. For without this and the concomitant legal authority to prevent open access to ‘their’ natural resources and its economic benefits, the communities would have little incentive to properly manage and invest in the resource base for they would not be assured of capturing the rewards of their management efforts.

Such policies and programmes incorporating the devolution of authority and management of biological resources to local landholders and owners, including rural communities, are already in operation in numerous DCs and LDCs and have already produced impressive environmental and economic benefits. Zimbabwe’s homegrown CAMPFIRE programme was a case in point, but similar programmes have successfully taken hold in a number of other SADC countries.

Dr. Munro pointed out that Zimbabwe’s general and overriding concern with the issue of trade and environment under the WTO regime was the widespread misconception – based on a superficial analysis perpetuated by the environmentalists movement – that trade liberalisation is inherently detrimental to the natural environment. On the contrary, and with reference to the examples of Canadian forest products and Zimbabwe wildlife products mentioned above, the removal of tariff and non-tariff barriers in Developed Countries imposed on environmental goods and services from DCs and LDCs, is a necessary incentive for sound environmental management in these Countries. Moreover, it is fully consistent with the WTO’s guiding principle of comparative advantage. Furthermore, extending this to the elimination of tariff escalation would encourage trade diversification from unprocessed and semi-processed wild products to processed and manufactured goods from wild resources, so contributing to general economic diversification and development.

Accordingly, increased international market access for Zimbabwe in environmentally based products and services represents an opportunity for Zimbabwe to increase its export revenues for development purposes. However, it will be a challenge for Zimbabwe to exploit this opportunity in the face of considerable international opposition.

Correspondingly, it is recommended that Zimbabwe in concert with SADC, the African Group and the Group of 77 and China, should resist all attempts at the Seattle negotiations to accommodate additional environmental concerns in the WTO regime such that any post-Seattle Round of negotiations excludes further consideration of trade-related environmental measures.

As environmental concerns will undoubtedly continue to receive attention in the WTO, whether or not in terms of a formal ‘new issue’ for negotiations in a new Round, Zimbabwe should persist in its opposition to market access restrictions on environment-related goods.

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4.2 PROBLEMS OF INTERNATIONAL TRADE LIBERALISATION AND LABOUR STANDARDS - ZIMBABWE’S PERSPECTIVES AND CONCERNS: Dr. G. Kanyenze, Economist, Zimbabwe Congress of Trade Unions

Dr. Kanyenze’s presentation pointed out that whereas at the beginning of the 1980s, structural adjustment was the buzzword, in the 1990s globalisation is in vogue. Globalisation is largely presented to developing countries as a fait accompli. It is often argued developing countries do not have much room for manoeuver, what they should do is integrate themselves as quickly as possible into the global economy.

Since 1991, Zimbabwe has been implementing an Economic Structural Adjustment Programme (ESAP), which emphasised the liberalisation of markets (including trade liberalisation). The benefits of (trade) liberalisation are generally based on efficiency considerations. Proponents of trade liberalisation argue that once protective barriers are removed, competing imports will flood into a country. Faced with competing imports, inefficient firms are forced out of the market, while more efficient ones emerge. The net effect, it is argued, is that a more efficient productive base is established, resulting in higher growth, more jobs being created and general improvements in the standard of living.

He noted that the expectation of neo-liberal theory was that faced with competition, firms would adjust to a more efficient level of production. However, lessons from experience suggest that faced with competing imports, there are two distinct routes to adjustment that firms have pursued, namely, the high wage, high-skill (intelligent-production route) and the low-wage, low-skill approach.

As countries liberalised investment, there has been a growing tendency towards ‘downward-biased’ competition involving the provision of incentives to would-be investors. In the past 5 years, Export Processing Zones (EPZs) have mushroomed in the region. Labour standards have been sacrificed in a desperate bid to attract investment. Concerned about the trend towards competition based on offering inferior labour standards, the SADC Employment and Labour Sector adopted at its meeting in Swaziland in April 1999 that labour standards should not be used as an incentive for investors.

It is important to note that one of the main reasons for adopting ESAP was the need to address the problem of unemployment. The rate of growth in employment decelerated from an annual average rate of 2.4 percent during the period 1985-90 to 1.5 percent during the period of ESAP (1991-97).

Except for some annual variations, the percentage of workers employed on a full-time basis on large-scale agriculture has decline over time from a peak of 75 percent in 1981/82 to 49 percent by 1997. By employing non-permanent workers, employers avoid incurring additional labour costs such as housing, pension payments, etc.

In addition, these can easily be retrenched since most are contract workers. The percentage of full-time employees who are female is very low indeed.

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Faced with the new challenges emanating from a more open trade regime, most firms have had to downsize their operations and focus on core business. Adjusting to competition has become synonymous with retrenchment. In this context of globalisation, firms will, the cost of capital permitting, employ more capital intensive techniques of production. This therefore implies the formal sector may not have the capacity to create jobs at the required rate.

There is general consensus that structural adjustment programmes have been largely unsuccessful. In the case of Zimbabwe, the World Bank now admits that:

  • growth needs to be inclusive - „Partial deregulation without a restructuring of the dual economy creates social tensions and not enough jobs";

  • ·. social sector expenditures need to be protected and targeted measures to deal with poverty should not be seen as ‘add ons’ but as an integral part of the programme;

  • state intervention is necessary - „Getting the prices right and making markets work better are important, but these need to be complemented with measures to ensure that the ‘unequal’ balance of power of those who can readily engage in the market and those who cannot, does not lead to dangerous levels of social tensions"; and

  • national ownership is critical

The experiences of most developing countries regarding globalisation have so far been negative. This emanates from the weaknesses of these economies, being mainly primary commodity producers. This has not been helped by the unfairness in the system, which has largely evolved on the basis of ‘horse trading’ amongst the most influential nations (in spite of claims that WTO is a ‘rules-based’ system).

The challenges facing Zimbabwe relate to the agenda of the Seattle meeting. The big powers, the USA, Canada and Europe have already indicated that they want to introduce new issues: competition policy, investment policy, government procurement, the environment, trade facilitation, electronic commerce and industrial tariffs. Implied in this attempt to bring on board new issues is the desire by the big powers to accelerate the pace of globalisation and to widen the process.

On these issues, the big powers intend to further open up markets elsewhere and provide access by transnational corporations (TNCs) in developing country markets (notice the emphasis is on the rights of TNCs and not their responsibilities).

As the African governments and social movements have rightly pointed out, no new issues should be introduced at Seattle. The existing injustices and inequities of the system must be addressed first. It is intolerable that the developed countries practice unfair trade by insisting on unilateral action on their part, while denying developing countries the opportunity to develop. For instance, while subsidies and other incentives provided for research, regional development and environmental adaptation by industrialised are non-actionable (are acceptable), those that are of interest to developing countries (such as developmental subsidies to encourage diversification or upgrading industry) are not actionable (not permitted).

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However, a major challenge to trade unions is with respect to social standards. While every trade unionist would like to see social standards applied, and indeed respected in all countries, it is the inclusion of a social clause in trade agreements that has created controversy. It is very clear that unions in the North in particular would like to see a Social Clause included under WTO.

Dr. Kanyenze expressed that regarding unionists in the South, the position is less clear. While accepting in principle the idea of a social clause, the problem is that developed countries reserve the right to use it as a Non-Trade Barrier – in other words, enforcement is based on unilateral action. On the issue of labour standards, the ILO has made some progress in addressing the issue. A Declaration on Fundamental Principles and Rights at Work was adopted in 1998. The document provides a blueprint for a global economy that respects the following core values: dignity of work, an end to discrimination, an end to forced labour, freedom of association, the right of people to organise and bargain. Countries are being encouraged to ratify the 7 core Labour Conventions.

These are: Convention 29 (Forced Labour); Convention 87 (Freedom of Association & Protection of the Right to Organise); Convention 98 (Right to Organise & Collective Bargaining); Convention 100 (Equal Remuneration); Convention 105 (Abolition of Forced Labour); Convention 111 (Discrimination in Employment and Occupations) & Convention 138 (Minimum Age Convention). During the 1999 International Labour Conference, a Convention seeking to eliminate the worst forms of child labour was adopted and the first country to ratify it is the Seychelles (Convention 182: Convention Concerning the Prohibition and Immediate Action For the Elimination of the Worst Forms of Child Labour).

It was therefore important that the issue of labour standards be addressed by the specialised agencies so as to avoid unilateral action and abuse of the Social Clause (in the form of non-trade barriers) if inserted in trade agreements. For this reason, it is necessary to take a leaf from the work of the International Programme for the Elimination of Child Labour (IPEC). IPEC is working world-wide to get children from factories to the classroom. An interesting example is what has been done to eliminate child labour from the football industry in Pakistan. The industry, in conjunction with the ILO and UNICEF, undertook a project to remove children from manufacturing footballs and give them a chance of going back to school.

SADC has made progress on the issue of labour standards. At the SADC Employment and Labour Sector meeting held in Swaziland in April 1999, SADC adopted the regional Social Charter which had been on the agenda since 1992. By adopting the Social Charter, the region has thus agreed to minimum labour standards that should be applied by all countries in the region.

Through this charter, the region seeks to harmonise labour standards and ensure minimum internationally accepted standards prevail. It may be necessary at this stage to recall that the Employment and Labour Sector of SADC, which is the only tripartite Sector in SADC, has the following as its main objectives:

  • ensure that the sector retains the tripartite structure of the three social partners, namely governments, employers and workers’ organisation;

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  • promote the formulation and harmonisation of legal, economic and social policies and programmes in member states which contributes to the generation of productive employment opportunities and incomes;

  • promote labour policies and practices and measures in member states which facilitate labour mobility, remove distortions in labour markets as well as enhance industrial harmony and increase productivity;

  • provide a framework for regional cooperation in the collection and dissemination of labour market information;

  • promote the establishment and harmonisation of social security schemes;

  • harmonise regulations relating to health and safety standards at work places across the Region;

  • promote the development of institutional capacity as well as vocational and technical skills in the Region.

To achieve these objectives, The Employment and Labour Sector formulated a regional Social Charter wherein governments, employers and workers in the region recognise the universality and indivisibility of basic human rights as stipulated in the United Nations Universal Declaration of Human Rights, the African Charter of Human Rights and International Labour Standards. These basic rights are spelt out as follows:

  • Freedom of Association and Collective Bargaining;

  • Freedom of movement;

  • ratification of core ILO Conventions and Recommendations;

  • Provide for equal treatment for men and women;

  • protection of children and adolescents;

  • provision of protection for elderly persons, disabled persons and social protection for all workers;

  • improvement of working and living conditions;

  • protection of health, safety and environment;

  • democratisation of the workplace, provision of information, consultation and participation of workers;

  • encourage the adoption of freely chosen occupation and an equitable (living) wage;

  • enhancement of workers education training and skills development, including paid study leave.

The implementation of the charter is a tripartite responsibility involving the national tripartite institutions and existing regional structures. The implementation of these issues is being done through the Annual Employment and Labour Sector Conferences

Pushing the deferment of new issues and proposing redress to existing anomalies at the Seattle Round will not be easy. It is important that strategies involving campaigns, networking, demonstrations etc be adopted. Trade unions have since known that the most effective way of negotiating is when negotiations are backed by mobilisation.

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Floor Discussion of Presentation by R. Munro and G. Kanyenze

The participants wanted minimum basic labour rights to be respected in the Social Clause. Meanwhile, Kanyenze explained that South Africa was arguing that its neighbours had no labour rights. There was need to leave the labour value issues to nations so as to come up with national policies. Ambassador Chidyausiku remarked that there was now an urgent need not to include the Social Clause into the WTO – should not allow workers to be used as a trade instrument. As such global labour issues should be left to the ILO.

Pertaining to Munro’s presentation, participants welcomed wholesomely issues and concerns raised and expressed that an American in Seattle should not determine what a Tonga villager should do with an Elephant herd eating his one-acre cornfield – only source of food – in the Zambezi Valley.


4.3 TRADE AND INVESTMENT: Dr. Tekere, LOTRU, University of Zimbabwe

Dr. Tekere’s presentation begun by outlining that during the UR developed countries were very anxious to include the issue of investment liberalization in the WTO whereas developed countries were not yet prepared for that. The resultant TRIMS agreement fell far short of developed countries’ expectations of putting investment regimes under a single window such as in the case of trade. Certainly the importance of FDI cannot be underestimated.

The causality between trade and investment is now well accepted particularly the role of trade and investment in promoting economic growth and development. FDI continue to grow faster than trade particularly in the 1990s where the share of FDI inflows to developing countries has expanded to nearly 19% of total FDI flows. Some developing countries like China, India, Korea, Singapore, Argentina and Latin America have become FDI sources. On the other hand, there is a multiplicity of national, regional, bilateral and multilateral regimes and regulations governing FDI inflows in different countries.

After Marrakech, the OECD countries tried to negotiate a Multilateral Agreement on Investment [MAI] with the aim of setting up a single regulatory regime for foreign investment based on non-discrimination, transparency and predictability along the lines of WTO. The basic idea was to create an environment of equal treatment between local and FDI. However, due to divergences in interests among the OECD countries and pressure from civil society groups the negotiations on a MAI broke down last year. Notwithstanding, developed countries have revived the issue and are pushing to include it in the new WTO round. For the developing countries there is no convincing argument to justify the need for multilateral rules on investment and are therefore calling for further work and analysis to deepen the understanding of members on the issue.

However, there is no strong case for developing countries to support the establishment of a stand-alone multilateral agreement on investment. So far existing agreements [TRIMS and GATS] provide ample scope to deal with liberalization in investments flow.

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Lessons from the Asian financial crisis also demand that developing countries take a new look on wholesome liberalization of financial flows including FDI.

Developed countries are proposing within the WTO framework the following measures to promote investment activities especially FDI:

  • Relaxation of the screening requirements for approving inward FDI.

  • Opening up of the industries to foreign trade and investment.

  • Minimization of restrictions on foreign equity participation.

  • Encouragement of foreign investors to take interest in the privatization process and infrastructural development in the countries where they invest.

  • To encourage governments to grant investment incentives to foreign investors.

  • To grant fiscal incentives to investors.

  • To reduce the overall tax burden to foreign investors.

Liberalization of investment flows and agreement on a single regulatory framework for FDI is envisaged to bring other benefits to developing countries such as technological spillovers, efficiency enhancing effects, greater diffusion of know-how, improvement in technology, increased productivity of firms, demonstration of new technologies, exposure to new ways of doing things, enhancing competitiveness and lowest cost production means


4.4 WTO NEW ISSUES – TRADE FACILITATION:
Mr. J. Mangudya, Assistant Chief Executive Officer, ZimTrade

Mr. Mangudya begun his presentation by explaining that trade facilitation was one of the WTO new issues that included the following:

  • Simplification and Rationalisation of Customs Procedures

  • Harmonisation of Rules of Origin

  • Implementation of Customs Valuation Agreements

  • Review of the Agreement on Preshipment Inspection

  • Protection of Intellectual Property Rights

  • Simplification of Sanitary and Phytosanitary Procedures

  • Harmonisation of various Standards including Safety and Environment Standards

[page number of print ed.: 44]

The trade facilitation barriers identified by the WTO Council on trade in goods included customs related difficulties e.g. barriers due to preshipment inspection, arbitrary customs valuation which is illegal under the valuation agreement, difficulties for express delivery, general absence of transparency procedures, unwarranted delays in getting goods released, and potential for corruption in the absence of transparency and automation in customs administrations.

According to Mr. Mangudya, there was undeniable link between economic development and improvements in the trade facilitation environment. A transparent system that allows rapid release of goods was a necessity for expanding economic output. There was need for just-in-time delivery and just-in-time distribution.

The developing countries were pushing for negotiations that aim to set up an effective and adequate multilateral framework of guidelines, rules and disciplines. There was the need to put in place processes based on ensuring full implementation of the existing WTO Agreements. Presently, WTO Agreements include GATT Articles VIII & X that deal with import and export fees and formalities and publication and administration of trade regulations.

He proposed that there is need to work towards harmonies documentation formats and procedures and under the same breath, should refuse the rush towards negotiations that aim to establish multilateral rules of trade facilitation until the following preconditions are include: Leveling and standardising of the playing field especially given the wide differences in the interpretation and application of trade procedures amongst various trading partners.

On border facilitation, for example, Zimbabwe is one of the few developing countries that have put in place the ASYCUDA system. There is need to link this system with other relevant players. Zimbabwe should therefore support a continuation of the development of both human and physical infrastructure and improvement of import and export management.


4.5 E-COMMERCE: Dr. R Dhliwayo, LOTRU, University of Zimbabwe

Dr. Dhliwayo kicked-off his presentation by defining e-commerce as the production, distribution, marketing, sale or delivery of goods and services by electronic means. Electronic commerce involves two types of deliveries:

  • Goods delivered physically, while ordered electronically which fall within the scope of the GATT

  • Electronic deliveries, which consists of services and therefore full within the scope of GATS.

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All GATS provisions whether relating to general conditions (e.g. MFN, transparency, domestic regulation, competition, payments and transfers, etc) or specific commitments (market access, national treatment or additions commitments) and general exemptions to the GATS (Article XIV) are applicable to electronic deliveries.

All GATS modes of supply are potentially applicable to electronic deliveries. Appropriate measures need to be maintained by members for the purpose of preventing suppliers of internet access, internet network and internet certification services who, alone or together, are a major supplier from engaging or in continuing anti-competitive practices.

Domestic regulation on electronic means of delivery needs to be in accordance with Article VI of the GATS. Regulatory measures on electronic means of delivery could be justified on the basis of specific public policy objectives to be defined. There is need to enhance participation of developing countries in e-commerce, in particular by improving and facilitating access to telecommunications services by the users in these countries, including SMEs. Technical assistance programs should be provided in a co-ordinated and transparent manner.

There is still the problem of how GATT, GATS and TRIPS can be applied to e-commerce. Given that custom duties contribute a lot to government revenue, especially of developing countries including Zimbabwe - in this regard no duty on e-commerce poses a problem. Also the issue of privacy and customer protection not addressed.


4.6 TALKING POINTS ON COMPETITION POLICY:
Mr. T. Chifamba, Minister Counsellor, Zimbabwe Embassy, Switzerland

Mr. Chifamba’s presentation outlined that the Working Group on Trade and Competition Policy was set up at the first WTO Ministerial Conference (Singapore December 1996) where at ministers agreed to establish a working group to study issues raised by members relating to the interaction between trade and competition policy. This included anti-competitive practices, in order to identify any areas that may merit further consideration in the WTO framework.

This group was to work together with another one on Trade and Investment, and draw upon work being done by UNCTAD and other intergovernmental organisations. The work of these groups was to be reviewed by the General Council after two years and any decision on future negations regarding multilateral rules in these areas was to be taken by consensus.

In December 1998, the General Council reviewed the work done by the Working Group and urged it to continue the study process focusing on discussing:

  • the relevance of fundamental WTO principles of national treatment, transparency and most-favoured-nation treatment to competition policy

  • approaches to promoting cooperation and communication among members, including technical cooperation

[page number of print ed.: 46]

  • the contribution of competition policy towards the achievement of WTO objectives, including promotion of international trade.

Mr. Chifamba pointed out that debate on these issues has mainly been among developed countries with very little participation from Africa, Asia and Latin America.

Regarding the relevance of WTO principles it is argued that national treatment, MFN and transparency are important for the sound application of competition law and for maintaining the effectiveness, impartiality and credibility of such law. However, it was also noted that these principles applied only in respect of government measures and not in regard to private practices, or even hybrid practices. Examples cited of anti-competitive practices which could have restrictive of discriminatory effects, include collective boycotts, exclusionary actions by professional associations, abuses of a dominant position aimed at preventing entry of new competitors, price fixing cartels, export and import cartels, and market-sharing arrangements.

The work of the Working Group has clearly shown that anti-competitive practices, could under certain circumstances, reduce market access and distort trade. There was therefore need to develop rules. However, the exercise of developing rules would not be aimed at the harmonisation of competition laws as different laws applied to different situations determined by the different levels of development and diversity of legal systems.

About 70 countries had competition laws and a number of countries, especially developing countries were in the process of contemplating enacting competition laws. There is general agreement on the need for further study and transparency in the form of voluntary notifications and review mechanisms.

Globalisation and trade liberalisation have resulted in greater need for cooperation and communication among WTO members on both the competition and trade fronts. Ultimate objective is to protect and promote public welfare, including consumer welfare from a trade perspective and from the competition prospective, cooperation is meant to ensure that anti-competitive practices did not adversely affect the commercial advantages resulting from elimination of tariff and non-tariff barriers.

Although the EU is pushing hard for negotiations to commence on multilateral rules on Competition Policy, there is no consensus on the issue. The US is leading opposition to multilateral rules. For us, our view so far is that the study process should continue and put more emphasis on the Development Dimension. We also argue that we should encourage greater and more relevant international cooperation especially in analysing the impact of mega-mergers as well as best approaches to enforcement.


5. VOTE OF THANKS AND CLOSURE

The ZimTrade Assistant Chief Executive Officer, Mr. John Mangudya, gave a vote of thanks and assured the participants that discussions on WTO provisions was a process and not an event, as such there will be more consultative workshops organised in a concerted effort to strategically position Zimbabwe’s foreign policy vis-à-vis the country’s stakeholder needs. Dr. Tekere from Lotru and Dr. Masiiwa from FES also thanked the participants for their attendance.

© Friedrich Ebert Stiftung | technical support | net edition fes-library | August 2001

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