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SECTION of DOCUMENT:


[page number of print ed.: 8]


SESSION 2: MANDATED ISSUES


2.1 AGRICULTURE: Mr. D. Hasluck, Director, Commercial Farmers Union

Mr. Hasluck’s presentation noted that as far as agriculture was concerned the WTO long term objective was for substantial, progressive reductions in support and protection of agriculture in order to try and level the playing field for those who trade in agricultural products in the world market.

The WTO Round in Seattle, 30 November to 3 December 1999, was to set the agenda for the next round of negotiations. As far as agriculture was concerned, the primary objective will be to review the effects of the reduction commitments of world trade in agriculture, non-trade concerns, and the special and differential treatment for developing countries.

The focus of agricultural discussions in Seattle will be on the „Green Box" measures and how they should be modified and improved to continue the development of agricultural production and trade, as it is widely believed that trade in agricultural products is important for generating economic growth and improving the standards of living of the world population.

Zimbabwe’s interests in Seattle would be to seek measures to stabilise markets and manage economic risk better through market instruments, while, at the same time, seeking greater access into developed country markets. „Green Box" measures that are so keenly sought after by developed countries are, unfortunately, not very meaningful to Zimbabwean farmers as the costs of these measures to the Government are prohibitive in terms of the resources available to fund them.

The best the agriculture industry can expect for Zimbabwe will be more equitable trade agreements and tariff regimes which prevent Government intervention in agriculture from distorting trade, while, at the same time, removing non-tariff barriers and increasing market access to developed country economies.

He noted that developed countries will float the concept of multi-functionality, a word not yet officially adopted in WTO parlance, but meaning an expansion of the existing provisions of the „Green Box" that will allow farmers in those countries to continue to enjoy high levels of domestic support so covering their overheads but, at the same time, being anti-competitive to Zimbabwe farmers whose Government does not have the resources to support farmers for the services that they already provide under the banner of multi-functionality - in Zimbabwe’s case, care and conservation of the environment, water resources and wild life preservation.

A lesser problem for Zimbabwe has been meeting the compliance in terms of notifications to the WTO in respect of making annual returns. Zimbabwe is one of the few African States that has complied, however, it no longer calculates the Aggregate Measure of Support (AMS) index for agriculture as it believes it to be unnecessary arising from the liberalization of the agricultural market and the stripping out of domestic support to agriculture because of economic reforms launched in 1991.

[page number of print ed.: 9]

Were the AMS to be calculated for Zimbabwe at the current time, the index would be negative because of the five plus five percent levy on the tobacco industry which, in aggregate, exceeds any domestic support that is provided to agriculture by some $460 million per annum. This situation is unique in the world at the present time and has been previously experienced only in Argentina that had a practice of taxing exports but also led to near-negative indices for AMS.

A problem that will be real for Zimbabwe in the next Round of WTO negotiations will be if the concept of multi-functionality is approved as an extension of the measures that already exist for „Green Box" support.

Mr. Hasluck projected that Zimbabwean products entering the markets of those countries that enjoy multi-functionality payments will be less competitive as the overhead costs of production on farms generally in such countries will be substantially less with producers only having to fund the costs of production, and rely on both multi-functionality payments and market realizations for income. In essence, European Union farmers enjoy very substantial domestic support for their production, if similar support were provided to Zimbabwean farmers it would cost the Government $18,5 billion per year to level the playing field. A lot could be done to preserve the environment, increase food security measures and indeed, stimulate production in Zimbabwe through the provisions of special and differential treatment for developing countries if the financial resources were available to the Government to do so.

Despite the seeming lack of benefits that have accrued to Zimbabwe through its WTO membership as far as agriculture is concerned this does not mean that Zimbabwe should be apathetic at the WTO Round particularly so far as setting the Agenda for the fresh round of negotiations that will follow from Seattle.

It must be argued that Zimbabwe as a developing country, deserves special attention for measures that go beyond the question of „Green Box" measures.

In particular, pointed out Mr. Hasluck, the potential of „Green Box" measures are, in any case, not presently accessible due to budgetary constraints. The Uruguay Round on agriculture recognizes the specificity of developing countries. Special and differential treatment for developing countries must be maintained. It includes Article 6.2 and 6.4(b) as well as the increased „de minimus" of 10 percent that were described under problems as not being fully utilized.

The „Green Box" specifically relates only to domestic support measures and not to external support. It is, therefore, inappropriate to include external development assistance in the WTO „Green Box" – since there was no evidence to suggest that external development assistance implemented by donor nations or multi-lateral agencies is trade restrictive or distorting. Despite arguments from particularly the United States, it would be unreasonable to impose an additional notification obligation on Zimbabwe in respect of development assistance that they may receive. In any event, donor countries rarely provide assistance that increases competition in their domestic market.

[page number of print ed.: 10]

On the other hand, Mr. Hausluck pointed out that the primary concern for Zimbabwe must be that it cannot hope to influence negotiations in the WTO on its own and, therefore, must seek alliances with like-minded agricultural exporting countries in order to give it the critical mass necessary to have notice taken of a common position that is sympathetic towards agriculture in Zimbabwe in the WTO. One should take cognisance of the fact that the majority of developing countries, particularly those in Africa, are net agricultural importers, therefore have very different interests in the WTO to those of Zimbabwe as an agricultural exporter.

Taking a synopsis of SADC, he noted that the only other country that is a net agricultural exporter is Mauritius and that is purely because sugar is the major agricultural export with very little else. South Africa, while being the biggest economy in SADC, it is a net agricultural importer – although it specializes in a number of products that are particularly WTO sensitive from a trade point of view e.g. example, sugar, wine, dairy products and fruit.

If one examines the countries that are agricultural exporters and have reduced or abolished domestic support, the majority of them are southern hemisphere countries collectively known as the Cairns Group, including Argentina, Australia, New Zealand, Indonesia and Papua New Guinea. While the United States and Canada are expedient members of the Cairns Group they do not practice what they preach when it comes to dealing with agricultural exports and imports. South Africa has joined the Cairns Group for the very reason that we advocate that Zimbabwe should consider joining. Simply that South Africa on its own does not enjoy the critical mass to be able to give it any negotiating power in the WTO.

Mr. Hasluck pointed out that it made sense that if the country’s biggest neighbour and biggest trading partner (South Africa) was part of the Cairns Group it would be sensible for Zimbabwe to align itself and apply for that membership. The Cairns Group was particularly interested in strengthening its negotiating position by being able to take on all developing countries that are agricultural exporters.

He concluded by noting that Zimbabwe, as a developing country and agricultural exporter, needs to point out that developing country markets are the markets of the future for developed country processed goods. Industrialized country markets and their populations are no longer growing although the structure of those markets is changing gradually. Against this background the following points need to be considered:

  • World prices of agricultural commodities have not increased and stabilized at levels predicted following the conclusion of the Uruguay Round.

  • Developing countries’ share of world agricultural trade continues to decline.

  • Domestic support in industrialized countries has become more decoupled in keeping with reduction commitments. Overall support to agriculture, however, remains huge at US $362 billion for OECD agricultural producers in 1998.

[page number of print ed.: 11]

  • Polarization between the European Union, Japan and the Cairns Group on agricultural trade over levels of support and protection remains an area that is likely to make the subsequent round of negotiations to the Seattle meeting very acrimonious.

  • Both reform and reduction commitments on support and protection are being strongly resisted by European Union farmers with considerable success.

  • ACP member states party to the Lome IV will enjoy, at best, reduced preference to the European Union beyond 2000 without meaningful increase in market access unless this can be obtained through the WTO.

  • The European Union are demanding reciprocity of ACP member states that are not classified as „least developed" after 2010 despite continuing to insist on retaining the Common Agricultural Policy.

  • Domestic support for developing countries has decreased more as a result of economic structural adjustment programmes and liberalization than as a result of the application of the rules of the WTO.

  • Aid flows to developing countries have decreased and the conditionality of donor support and Bretton Woods Institutional lending has increased.

  • Market access for developing countries’ agricultural products face increasingly stringent sanitary and phytosanitary regulations to meet both Government and consumer-driven requirements of health, safety and quality specifications - this can present non-tariff barrier problems for Zimbabwe.

  • There are increasing disputes over the WTO definition of „scientifically safe" and the use of genetically modified organisms (GMO’s) in the food chain.

  • These negative developments have had a major impact on Zimbabwe, therefore, amendments to the WTO Agreement on Agriculture must address these issues if the development of Zimbabwean agriculture is to be successful in the future.

Floor Discussions of Presentation by D. Hasluck

The participants expressed that Mr. Hasluck should expand more on why Zimbabwe should overnight belong to the so-called Caines Group, given that the country had benefited from membership to the South-South Co-operation, Comesa, Sadc, ACP and many more other multilateral bodies.

Mr. Hasluck pointed out that Zimbabwe was the only net food exporter in the region, beside the Mauritius, which is an island. All indications at this junction were pointing to the ACP member states’ loss of preferential access into the EU within the Lome Convention. This was why Zimbabwe needed to belong to a group such as the Caines Group whose members are primarily net food exporters, and would be a strong body to reckon with at negotiation tables in the new millenium.

[page number of print ed.: 12]


2.2 TEXTLES: Mr. B. Hulley, Representing the Textile Association of Zimbabwe

Mr. Hulley’s presentation focused on the plight of the textile industry in Zimbabwe, which since the introduction of economic reforms in 1991 has been facing major structural problems due to the usage of obsolete technologies as well as production methods. The industry in 1990 had a turnover in excess of US$500 million, but to date hardly surpass the US$80 million peg – there has been a 50 percent downsurge in industry earnings in real terms.

The lapsing of the 1964 trade agreement between Zimbabwe and South Africa also compounded the industry’s problems, given that more 70 percent of local production was exported into the South African market. The local market can only absorb 25 percent of the industry’s total production. Most companies in Zimbabwe in the industry are now scaling down or simple waiting for closure day.

He pointed out that if Zimbabwe or any other country from the region is going to be successful, the SADC member states should pull their muscles together to come up with a position paper on the textiles industry. There were already discussions at a regional level of mooting a SADC Textiles Federation, which will become the lobby group for the industry at such for a as the ACP-EU and WTO negotiations.

Meanwhile, in order for the industry to be able to fully adhere the WTO provisions, Mr. Hulley indicated that it needs at least 10 years. Once there are production overruns in Europe and SADC is taken as a market option, local companies will perish due to the sheer volumes, according to Mr. Hulley. The industry still has a comparative advantage in the labour force, which is relatively well priced and highly trainable, compared to the region and the rest of the world. But in order to revitalise the industry and grow there is need to create:

  • A conducive environment, were the tariff structures of the SADC member states are significantly reduced – by at least a 40 percent effective tariff reduction rate

  • The right macro-economic environment, thereby making access to affordable funds feasible. The industry can not re-equip with financing from facilities attracting as much as 70 percent rates of interest.

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2.3 FINANCIAL SERVICES: Mr. W. Nyemba, Managing Director Trust Merchant Bank.

Mr. Nyemba’s presentation primarily focused on the unfolding events local and global perspective in the financial industry. Since the early 1990s, both internal and external financial markets have changed as nations embarked on economic structural reforms. On the international financial market, developed countries sped up their financial reforms to further strengthen their financial systems. Moreover, with the birth of WTO in 1995, whose mission is to integrate international market, the global financial market changed even faster.

In Zimbabwe financial sector reforms have become an integral part of economic reforms under the World Bank and IMF sponsored structural adjustment programs. Banking and finance structures in the country are reasonably developed although the range of financial institutions that exist is highly skewed and concentrated mainly in urban centres. A large proportion of credit needs of some important sectors that are supposed to be the engine of growth remain unfulfilled or only partially fulfilled through the informal financial sector.

He noted that the international liberalisation of financial services was a topical issue at the Uruguay Round of Negotiations in 1993 under the auspices of the General Agreement on Trade and Tariffs (GATT). However, the issue remained unresolved at the end of the talks and was to be pursued under a provision for extended negotiations in the sector. In 1995 the World Trade Organisation (WTO) came into being as a successor of GATT and immediately assumed the responsibilities of the latter and to finalise the liberalisation of financial services, and other trade services. So it is against this background that the WTO is hosting the 1999 Seattle Conference to look at, among other issues, the internationalisation of the global financial markets.

Financial liberalisation is a multi-dimensional and phased process sometimes characterised by reversal of gazetted policy measures. It is a process that a country would embark on, on the basis of the country’s level of development, the current state of the domestic supervisory capabilities and the current state of the financial system as a whole.

Basically, the WTO in its strategy to forge ahead with financial liberalisation is trying to achieve the following:

  • The right to establish and operate in the form of one’s choice, including branches (increasing competition in the sector by opening up entry and exit from the sector),

  • The right to majority ownership,

  • Assurance of one’s existing rights in foreign markets, and

  • The right to participate fully throughout the market, on the basis of substantially full nation treatment.

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Mr. Nyemba pointed out that financial liberalisation sought to promote availability of a wide range of financial instruments to savers and investors through and expanded financial infrastructure, improve determination of interest rates in order to reflect the opportunity cost of financial resources, improve the allocation of foreign exchange and the determination of the exchange, and improve the overall process of financial intermediation, and mobilisation and allocation of financial resources.

The WTO believed that economic stability, growth and development can only come as a result of international competition in banking, securities and insurance markets. The WTO provisions are, however, conscious of the critical need for prudential policies to safeguard financial systems for the benefit of investors and consumers.

Financial liberalisation enhances competition and improves on sectoral efficiency, leading to lower costs (in transferring resources from savers to borrowers), better quality and more choice of financial instruments and services.

Elucidating on economic theory, he noted that the free movement of capital permits a more global allocation of savings and directs resources toward their most efficient use. Obviously there will be improvements in financial intermediation and investment opportunities through better resource allocation across sector countries and time, and through better means of managing risks and absorbing shocks.

Access to capital will be enhanced as links to international financial markets improve. Poor links to international markets are a major constraint to economic development as domestic institutions may be too weak to support economic growth and it should be appreciated that financial repression imposes a heavy and highly regressive tax on domestic citizens.

Liberalisation can spur domestic savings and together with foreign capital (through the stock exchange and other channels) can result in:

  • Highly developed infrastructure;

  • Healthy competition as opposed to stifled competition

  • Economic development.

In the absence of a broad international consensus on measures to curb volatility of capital movements, developing nations need to maintain a measure of autonomy to deal with inward and outward movements of capital. The need for such flexibility should be reflected in future negotiations relating to problems that might affect the balance of payments.

In the case of Zimbabwe, Mr. Nyemba expressed that politically and socially it will be disastrous to rush liberalisation of financial services into full gear before mechanisms are put in place to safeguard local interests. More time was needed to put the house in order. Economically, we know our handicap in a number of areas.

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Zimbabwe favours a gradualistic approach to financial sector reforms mainly because the development of „borrower net worth" will determine the health of the real sector and ultimately the financial sector.

The proposals by the WTO equate countries, which are at different levels of economic development. The most favoured nation (MFN) status is on a reciprocal basis. The developed countries must be prepared to offer more than what they get from less developed countries. If liberalisation was not done this way, only the developed countries will stand to reap the rewards of an open global financial market.

Balance of Payments Safeguard provisions have been abused before where a developing country was pitted against the IMF’s single largest shareholder, the USA. Under Article XII of the GATS, a country facing a BOP problem may impose temporary restrictions on trade in services that result in the non-fulfillment of its GATS commitments. One would have assumed that these provisions would enable a country to take prudential measures to preserve the integrity and stability of its financial system and to protect its domestic financial sector from excessive competition from foreign firms. But precedent has shown that this flexibility is not there – once you sign the commitments you will not be able to reverse them. The WTO and its disciplinary committee are the only arms to approve such reversals.

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2.4 WTO AGREEMENTS ON SUBSIDIES, SAFEGUARDS AND COUNTERVAILING MEASURES, ZIMBABWE’S EXPERIENCE:
Mr. C. Mbegabolawe, Assistant Secretary for Ministry of Industry and Commerce

Mr. Mbegabolawe begun his presentation by stating that under the WTO provisions, there was government assistance to achieve certain policy objectives, either in developing or developed countries, for example:

  • Development of new industries, investment in rural or growth centres, improving infrastructure, or establishing new exports or value added exports.

  • Focus on this assistance as it relates to non-agricultural products, and specifically industrial products

  • Assistance has also a financial tag to it, that is, measurable. This aspect was important as it should be understood when addressing the counter-availability

  • Another important aspect was the trade tag, specifically, the export or import consequence of the assistance – the assistance should be targeted at exporters or an industry to improve the production of goods for exports or for domestic consumption.

He noted that the assistance should confer a benefit, otherwise it is not a subsidy in the meaning of the WTO Agreement and could be a financial contribution by government or public body and income or price support.

Some financial support examples include:

Direct transfers of funds from Government (e.g. grants loans, equity infusion) or potential direct transfer of funds or liabilities (loan guarantees), that is, anything below normal investment or commercial practice.

Government forgoes revenue that is due, tax remission rebate or tax credit

Provision by government of goods or services other than general infrastructure for example raw materials, factory space, free information service, or government purchased goods, again outside normal commercial practice

Income or price support, for example fixed domestic transport charges for export goods or exemption of domestic industry from internal taxes payable on imported goods for a domestic industry,

He explained that the rationale for disciplining subsidies is that for an importing country, imported products have unfair competitive advantage over domestically produced products whose implication could be harm to that domestic industry. On the other hand, an exporting country reflects a reverse of the situation; where import competitiveness is curtailed unfairly by cheaper in place of more expensive domestic product. In the case of a third export market there will be unfair competitive advantage for subsidising exporter whose implication could harm domestic industry.

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According to Mr. Mbegabolawe the main objective of the Agreement is to discipline or restrain subsidies with adverse effects on trade of other countries, not all subsidies.

There are two types of subsidies identified in the Agreement as prohibited, namely, subsidies contingent upon export performance, for example illustrative list of measures given in Annex I of the Agreement and subsidies contingent upon the use of domestic product over imported products. On the other hand, permissible subsidies are those falling outside the above. These are further categorised into two, namely actionable and non-actionable subsidies. Actionable means the subsidy is permitted within certain limitations beyond which the subsidy becomes countervailable. Non-actionable means no countervailing duty cannot be levied on products enjoying such subsidies. The general criteria for differentiating these two is the so-called specificity concept, that is, whether the subsidy is of a general nature applied across the board to all industries and not limited to a specific industry or enterprise or group of enterprise/industry.

There are exceptions to this concept, and strict criteria apply to these exceptions for example:

  • Research activities conducted by firms directly, e.g. the condition is that the assistance covers not more than 75 percent of the cost of industrial research,

  • Assistance to disadvantaged regions within a country, as part of a general framework of regional development and with objectively established criteria, and

  • Assistance to promote adaptation of existing facilities to new environmental requirements imposed by law resulting in greater constraints and financial burden on firms, on condition that this is limited to 20 percent of the cost of adaptation, be a one-time non-recurring measure.

Limitations that can result in actionability are:

  • The measure causes material injury or threat thereof to the domestic industry of a member or material retardation of the establishment of an industry in the territory of a member,

  • The measure causes nullification or impairment of benefits, particularly benefits of tariff binding, and

  • The measure causes serious prejudice or threat thereof to the interests of another member.

With reference to key terms under subsidies, safeguards and countervailing measures, Mr. Mbegabolawe explained that domestic industry was defined by the domestic producers of like key products as a whole, whose collective output of the products constitutes a major portion of the total domestic production of those products. If only a few enterprises are affected by a subsidy action is not called for.

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He indicated that the term injury was used to describe material injury to the existing domestic industry or material retardation of the establishment of domestic industry. Injury also included threat of such injury and was measured by an evaluation of all economic factors having a bearing on the state of the industry – for example a decline in output, sales, market share, profit, productivity, return on investments and capacity utilisation.

As for remedial action, there was the dispute settlement system or countervailing duty processes, that is, a process of investigation for countervailing duty and application – though only one form of relief will be available. Countervailing duty processes used where injury is involved, otherwise dispute settlement process is applicable in case of prohibited subsidies or serious prejudice.

With countervailing process, there is the need for an application from domestic industry or ex officio if government has sufficient evidence of subsidy, injury and casual link. This is then followed by consultations with affected members for a solution, at this juncture it is necessary that there be a preliminary examination of the accuracy and adequacy of the evidence to justify an investigation. The application should be supported by stipulated minimum proportion of the producers, and the amount of subsidy is not de minimus, that is, less than one percent in general cases or less than three percent in the case of developing countries. The volume of the subsidised import or injury should not be negligible, that is, four percent of the total import of like products for a developing country, or not more than nine percent collectively.

In the case of pursuing a full investigation, interested members and parties should be notified and given opportunity to present their case. Thereafter, determination should be made on the existence of subsidy, amount of subsidy, injury and casual link and countervailing duty up to the full amount of subsidy or less imposed after which provisional measures can be taken.

Zeroing on the implication of the agreement to Zimbabwe, Mr. Mbegabolawe said Zimbabwe was among countries that are excluded from the coverage of Annex VII of the Agreement that relates to prohibition of export subsidies. However, should the country attain a GNP per capita of $1 000 per annum or a share of export of a particular product up to 3.25 percent of the world export of that product for two consecutive years, it will have to phase out the export subsidy on that product in eight years. De minimus level of three percent below which countervailing duties may not be imposed for developing countries.

He pointed out that proposals made as part of the Seattle Conference included amending Annex I of the Agreement to provide developing countries the flexibility to finance their exporters, consistent with their developmental objectives. For example, these countries may need to provide competitive export financing vis-à-vis the conditions found in the international market or those offered by the credit agencies of developed countries – controlled by and or acting under the authorities of the governments.

There was also the need to increase the de minimus level (Article 27.11) as well as expand the coverage of countries falling under Annex VII.

[page number of print ed.: 19]

The challenges facing Zimbabwe included institutional capacity to enable the government to take action and also to defend its interests. There is the need to formulate laws, regulations and procedures for conducting investigation into the application for countervailing duty. Given limitations in manpower and machinery, there is need for competent authorities to initiate and conduct investigations, take administrative actions including by judicial or administrative tribunals, carry out reviews and to examine, in cases where a government is the defendant, the allegation in the application about subsidy, injury and linkage.

There is an obligation to notify all subsidies maintained, that is, information on the form of subsidy, rate of subsidy and statistical data permitting an assessment of the trade effects of the subsidy. This is in addition to the notification of legislation as stipulated in preceding paragraphs.

In the case of trade negotiations, Zimbabwe’s objective was to keep options for development open, not closed as some of the agreements seek to achieve. In the area of subsidies it means leaving open room for providing subsidies in line with the country’s developmental needs and available resources, according to Mr. Mbegabolawe. Regarding concrete proposals for negotiations, government was awaiting inputs from the business sector so as to formulate a negotiation position that addresses and safeguards Zimbabwe’s commercial interests.

Floor Discussions of Presentations by B. Hulley, W. Nyemba and C. Mbegabolawe

Mr. Chifamba pointed out that he was alarmed by a suggestion from Hulley that the textile industry needed 10 years to attain market competitiveness, given that most key textile producers from a global perspective were ready for liberalisation. He suggested that there was need to move away from the multi-fibre agreement, that is, with Zimbabwe’s negotiations. The delegates welcomed a suggestion by Hulley of forming strategic partnerships in a concerted effort to jump-start the textile industry’s ailing fortunes.

In response to the foregoing, Hulley said the problem with the country’s textile industry was it tried to be everything to everyone – there was a definite need to start specialising and try to meet the top end of the market. Expanding on the issue of strategic partners, it was noted from the floor that if Zimbabwe was to be successful in attracting investors, there was a desperate need to put the right incentives in place. Currently Zimbabwe is engulfed with a skewed macroeconomic environment characterised by historically high annualised inflation rate of 70,4 percent as of October 1999.

The floor agreed that Nyemba’s presentation did not tackle the issues under the 1995 GATS provisions on trade and financial services. Unfortunately, Nyemba was not present for a response. Dr. Tekere told the participants that Zimbabwe did not participate in negotiating the agreement on financial services.

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2.5 WTO AGREEMENTS ON TRIPS, ZIMBABWE POSITION WITH REGARD TO TRIPS: Mr. R. Manyonga, Acting Assistant Registrar, Office of the Comptroller of Patents, Trademarks, Industrial Designs and Copyrights

Mr. Manyonga’s presentation focused on the trade related aspects of intellectual property rights (TRIPS). Intellectual Property refers to the rights afforded by law in respect of patents for inventions, trademarks, copyrights, designs, utility models, plant varieties and unlawful competition. As a form of property, Intellectual Property has similar characteristics associated with real and personal property. Thus Intellectual Property can be bought, sold, licensed, exchanged or gratuitously given away. Further, the Intellectual Property owner has the right to prevent the unauthorised use or sale of the property. Like any form of property, intellectual property can be subjected to limitations of the exercise of that right – the validity of the intellectual property is limited in time and is territorial.

According to Mr. Manyonga, there are generally three kinds of property, which may be distinguished as following:

  • Movable property such as wristwatch, cars etc,

  • Immovable property such as land and other assets affixed to land such as houses etc, and

  • Intellectual Property.

On the other hand, Intellectual Property is divided into two groups namely:

  • Industrial Property which relates to the protection of inventions, marks, industrial designs, utility models

  • Copyright which relates to protection of artistic and literally works etc.

The rationale for incorporating intellectual as a trade issue is hinged on the fact that the objects of intellectual property and protection has a great input on international trade. In the case of the patents for inventions, they are designed to encourage the disclosure of information to the public by rewarding inventors. The inventor is given the exclusive rights to prevent third parties from making, using or selling the protected invention for a limited period of time in turn for disclosing the details of the invention to the public for a new non obvious invention capable of industrial application.

The monopoly rights accorded to the inventor enable him/her to recoup the investment money, time and efforts associated with research. In the mean time the competitors are forced to invent alternative invention to the patented inventions by so doing investment and innovativity is stimulated and accelerated.

Intellectual property also includes trademarks, service marks and application of origin (or geographical indications). In this case protection is accorded to signs of symbol or words which allow manufacturers to distinguish their products or their services from those of others.

[page number of print ed.: 21]

The importance of trademarks in trade therefore, is to build consumer loyally and confidence and assist the consumer in making informed choices on the quality of the products.

The commercial value of Industrial property can be illustrated by the extent of its abuse by unauthorised persons for commercial purposed. In recent decades due to lack of an international scheme for intellectual property protection, Patent and copyright infringements have become a routine and a lot of Industries have been commercially disadvantaged by pirated and counterfeited goods to the extent that certain goods like Gucci handbags, Rolex watches etc. are now branded as „traditional counterfeit goods"

This practice is considered as a distortion and impediment to international trade liable of damaging the legitimate commercial interests of manufacturers to the extend that most countries including developing countries have questioned the appropriateness of intellectual property. This has been largely blamed on the lack of an adequate internation mechanism for the protection of Intellectual property.

Mr. Manyonga pointed out that it was for this reason that many governments resorted to GATT and its Uruguay Round of trade negotiations in order to seek international protection of their Industrial property rights. The Uruguay round of trade negotiations begun in Punta del Este, Uruguay in December 1986 and concluded with an Agreements on Trade related Aspects of Intellectual property (TRIPS).

The TRIPS agreement recognised the importance and significance of prior multilateral treaties on intellectual property. TRIPS was built on the main international convention and incorporates these treaties by way of reference. The conventions whose provisions are mentioned in TRIPS are as follows:

  • Provisions of the Paris Convention for the Protection of Industrial Property (1967) mentioned in the TRIPS Agreement.

  • Provisions of the Berne Convention for the Protection of Literary and Artistic Works (1971) mentioned in the TRIPS Agreement.

  • Provisions of the International Convention for the Protection of Performers, Producers of Phonograms and Broadcasting Organisations (the Rome Convention) (1961) mentioned in the TRIPS Agreement.

  • Provisions of the Treaty on Intellectual Property in Respect of Intergrated Circuits (1989) mentioned in the TRIPS Agreement.

  • IPIC Treaty on the Protection of Integrated Circuits of layout Designs – popularly known as the Washington Treaty.

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Meanwhile, the provisions of the agreement are divided into eight following parts:

a. GENERAL PROVISIONS AND BASIC PRINCIPLES

The TRIPS Agreements articles 1 through to article 8 establishes the nature and scope of obligations under TRIPS and specifically provides that member state may provide more extensive protection than is required by the TRIPS Agreement as long as such protection does not contravene the TRIPS Agreement. The term „intellectual property" as understood in the TRIPS Agreement includes all those provided for on Part II sections 1 through 7. The criteria eligibility for protection shall be the same criteria as obtained in the Paris Convention, the Berne Convention, and the Rome Treaty. Under article 3 and 5 fundamental rules are encoperated on „national treatment" and most favoured „nations treatment". These obligations cover substantive standards of protection and in addition matters affecting validity, acquisition, scope, maintenance and IP enforcement, in the matter of exhaustion, and for purposes of settlement of disputes, the national and most favoured national treatments clause shall be observed. The rationale behind the protection of IP, is to promote technology transfer and disseminate information and to prevent abuse of intellectual property. These two aspects are key objectives (Article 7) and principles (Article 8) of the IP systems.

b. STANDARDS CONCERNING AVAILABILITY SCOPE AND USE OF IP RIGHT

The TRIPS agreement under Article 9 provides that members must comply with articles 1 through to 21 of the Berne Convention. The Berne Convention is itself based on the following four principles:

  • National Treatment

  • Automatic Protection

  • Independence of protection and

  • Principle of Reservation

Article 9 (2) however excludes from copyright protection ideas procedures and methods of operation or mathematical concepts.

The TRIPS agreement provides for the protection of computer programs under article 10.1 and data and other materials article 10.2. Exclusive right to make or authorise translations adaptations are allowed. However under article 11 of the TRIPS Agreement commercial rentals of original copies are prohibited.

The term of protection under Article 13 of Berne Convention is 50 years after the death of the author while under article 12 of TRIPS Agreement a more referral and provides for no less that 50 years. The Rights conferred to the authors include the right to authorise or prohibit the direct or indirect reproduction of their phonograms.

Registration of trademark could be extended beyond dictates of the TRIPS Agreement provided such an extension is within the provisions of the Paris Convention. Natural use and the nature of goods and services should not be used as a bar to registration.

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The mark shall be protected for a period of not less than seven years while it enjoys the right to be honoured indefinitely. If use is required for the maintenance of registration three years such be required to institute cancellation. Conditions of licensing and assignment shall be determined by member states.

Section 3 deals with geographical indication which identify a good as originating in a territory, region or locality in that territory where a given quality or reputation is attributable to geographic origin. The legal means provided for right owners include:

The use of any means in the designation or presentation goods that indicates or suggests that goods in question originates in geographical area other than the true place of origin in a manner which misleads the public as to the geographical origin of the good.

Any use which constitutes an act of unfair competition within the meaning of article 10 (b) is of the Paris Convention (1967),

The enforcement of above rights involves refusal or invalidation of registration of a mark deemed to contain a geographic indication with respect to goods not originating in the territory indicated or falsely represents the origin of goods to the public.

Focusing on Zimbabwe, Mr. Manyonga indicated that in order to effectively ensure Zimbabwe fully meets its obligations under TRIPS. The following issues must be addressed and where possible assistance sought from WIPO/WTO and other developed countries namely assistance on legislation, especially the Trade Secrets Act to be sought.

A national meeting has to be organised to explain the implications of TRIPS to industry, commerce and other stakeholders. There was also the need for fellowship study visits and advisory meetings that needed to be undertaken and these should include:

  • Special meetings and courses for policy makers/advisors, officials, judiciary and enforcement agencies (custom/police), attorneys, scientific researchers and academic institutions, inventors and inventor’s associations, has to be convened.

  • Assistance regarding technology transfer and licensing arrangements should be extended to these bodies.

In terms of institution building and modernisation of intellectual property system, Mr. Manyonga pointed out that there is need for assisting the setting up of collective administrations of copyright, preparation of work manuals and rationalisation and simplification of work procedures, full computerisation of the Intellectual Property Office, although WIPO is assisting so much in this respect.

[page number of print ed.: 24]


2.6 WTO AGREEMENT ON TECHNICAL BARRIERS TO TRADE: Ms P. Mutasa, Director, Standards Association of Zimbabwe

Ms Mutasa told participants that the WTO Agreement on Technical Barriers to Trade sets rules to provide secure and predictable international trading environment and trade liberalisation through the reduction of technical barriers. Zimbabwe as a signatory to this agreement therefore committed itself over a period of time to:

  • Lessen its protection of the local industry by means of lowering tariffs on imported goods.

  • Ensure that technical regulation standards or testing and certification schemes adopted in Zimbabwe do not create designated and unnecessary barriers to trade.

It is important to note that the WTO Agreement on TBT also covers provisions for technical regulations most of which are set by government. SAZ Standards are voluntary upon publication and its certification schemes are also voluntary. However, there are about 43 SAZ Standards, which by virtue of their being referred to in legislation are compulsory. The SAZ has also drafted a Memorandum of Understanding with Government seeking wider use of SAZ Standards in regulatory activities.

Out of the 15 articles in the WTO Agreement on TBT, the SAZ as the national standards body of Zimbabwe was required to implement Articles 4, 8, 9 and 10. The following is a presentation of the articles and the extent to which SAZ was meeting their requirements.

Requirements of Article 4 are that members shall ensure that their central government standardising bodies accept and comply with the Code of Good Practice for the Preparation, Adoption and Application of Standards.

The Standard Association of Zimbabwe as the recognised national standards body in Zimbabwe is signatory to the WTO/TBT Code of Good Practice for the Preparation, Adoption and Application of Standards. It is therefore implementing the 14 substantive provisions of the Code namely:

The Code of Good Practice encourages the adoption/adaptation of „international" standards. No clear definition of „international" standard is given. There are over 50 international standards setting bodies world-wide. Their focus is either issue, that is, sector or product specific for example ILO, WHO, ISO etc. The agreement defines „international system or body" as „body or system whose membership is open to the relevant bodies of at least all members". This definition can be used to clearly identify the „international" bodies.

Ms Mutasa stressed that most ISO members are members of the WTO, and SAZ accepted the Code of Good practice, in the framework of its membership to ISO. Within ISO, however, there is discontent regarding dominance by certain regions for example some CEN standards which are regional standards for the European Countries are finding their way easily into the ISO standardisation activities.

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ISO standards are published through a voting process and there is a tendency of dominance by groups such as CEN. WTO members are expected to „fully" participate in the preparation of international standards. Most developing countries including Zimbabwe do not have the required financial resources to do so. SAZ is struggling to pay ISO annual subscriptions of 30 000 Swiss Francs equivalent to Z$950 000. It was failing to attend most of the ISO TC meetings. Zimbabwe would benefit if SAZ could fully participate in those ISO TCs which deal with standards of economic significance to the country, that is, for products like tobacco, food, textiles, leather etc.

SAZ being an independent body has voluntary conformity assessment as one of its main function. Conformity assessment refers to procedures for determining directly or indirectly that relevant requirements in SAZ’s case, voluntary standards are fulfilled.

The procedures include sampling, testing, inspection, evaluation, verification and assurance of conformity through certification of products and systems. Although accreditation is also part of conformity assessment, it is not within the scope of SAZ’s activities.

Article 8 requires members’ conformity assessment to be in line with Article 5 and 6 of the Agreement, which oblige members to ensure that procedures for conformity assessment are not prepared, adopted or applied, with a view to or with the effect of creating unnecessary obstacles to trade. Conformity assessment procedures shall not be more strict or be applied more strictly than is necessary to give the importing member adequate confidence that products conform with technical regulations or standards.

Multiple testing, inspection and certification of products exported to different countries increases business costs and uncertainties and can create unnecessary barriers to trade. Ideally the testing of a product should take place once in the country of origin and the test results should be accepted in all export markets. Article 6 therefore encourages members to enter into negotiations for mutual recognition agreements on conformity assessment and to accept the results of conformity assessment procedures of other members whenever possible and provided they are satisfied with those procedures. The Agreement recognises that prior consolations may be necessary in order to arrive at a mutually satisfactory understanding regarding the competence of the relevant conformity assessment bodies. Under Article 9 of the Agreement, WTO members are obliged to formulate and adopt international systems for conformity assessment, wherever possible.

ISO and IEC have published various voluntary guides that certification bodies should comply with. The SAZ’s ISO 9000 certification scheme complies with ISO/IEC Guide 62: General requirements for bodies operating assessment and certification/registration of quality systems.

SAZ’s ISO 9000 certification scheme is accredited by the South African National Accreditation Systems (SANAS). The SANAS certificate is recognised in more than 21 countries world-wide. The SAZ operates a product certification scheme is accordance with ISO/IEC guide 65 and intends to set up an ISO 14000 – Environmental management certification scheme in accordance with ISO/IEC guide 66. The SAZ laboratories are currently implementing ISO/IEC 17025, which at the moment is at Final International Standard stage, and will seek accreditation to this standard in the future.

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The operation of any certification scheme requires competent auditors for example quality and environmental audits should be done under the supervision of a qualified auditor. Thus the initial SAZ auditor(s) normally have to acquire this experience outside the country which is costly. In order for SAZ laboratories to be accredited their facilities i.e. both equipment and buildings need to be upgraded. This again requires a lot of financial input which in most cases the SAZ cannot afford. At the moment there is no accreditation body in Zimbabwe. As a result accreditation services are sought externally. With the current value of the Z$ this makes accreditation very expensive.

Article 10: Information about Technical Regulations, Standards and Conformity Procedure – this requires WTO members to ensure that an inquiry point exists which is able to answer all reasonable inquiries from other members and interested parties. The SAZ was appointed by the Ministry of Industry and Commerce as the Inquiry point for standards information and voluntary conformity assessment procedures.

Technical Assistance to other Members, Article 11, requires members if requested, to grant technical assistance especially to developing country members, on mutually agreed terms and conditions. Although some technical assistance e.g. training and participation in international standardisation activities has been received, generally it is difficult to access this assistance and any other assistance. Besides the donor has a tendency to dictate to the recipient actions which they are prepared to fund instead of fulfilling the latter’s genuine needs. More technical assistance is required for the SAZ in particular to:

  • Set up its WTO/TBT inquiry point.

  • Participate in international and regional standardisation activities.

  • Upgrade its laboratories.

  • Establish world-wide accepted certification schemes.

Zeroing on the concerns at the next round of the WTO talks, Ms Mutasa noted that there was need for a clear definition on what constitutes the term „international" in the context of standardisation and conformity assessment procedures. The Agreement could be more specific by listing international organisations. Technical assistance in all areas of need should be more accessible and donors should meet the recipient’s genuine needs. Such assistance should also enable developing countries to effectively participate in international standardisation activities. This way developing countries can ensure that international standards and conformity assessment procedures being set are acceptable to them.

Definitive measures could be included in the Agreement to ensure transparency in international standardisation activities e.g. by making it an obligation:

  • For developing countries to be involved in international standards development process.

  • For developed countries/international standardising bodies to provide financial assistance.

[page number of print ed.: 27]

  • For international standards setting bodies to adhere to the Code of Good Practice.

The state of standardisation and conformity assessment activities world-wide is confusing as there is so much going on at regional and international levels resulting in duplication e.g. in Africa there are efforts within ARSO, and efforts within the SADC region. More cooperation and coordination is required.

On a conclusive note Ms. Mutasa pointed out that the WTO Agreement on TBT has the objectivity of ensuring a trading environment in which standards and conformity assessment procedures are not obstacles to trade. Its provisions if implemented will ensure free trade between member countries, leading to enhanced economic development and creation of wealth. The SAZ is trying as much as possible, with its limited resources, to ensure the requirements of the WTO Agreement on Technical Barriers to Trade. There are benefits to be accrued in this but the cost of implementation is beyond SAZ’s means

Floor Discussions of Presentation by M. Mutasa

Pertaining to the issue of adapting standards, the floor stressed that there was need to focus on issues affecting Zimbabwe, for example, environmental problems since these will compromise production in the country. In response Mutasa explained that the SAZ was not simply adapting first world standards to Zimbabwe – a late industrialising country. But as starting point SAZ go word by word in a concerted effort to see if the standards are applicable to local conditions – if not the standards will have to be panel beaten. It was essential to note that performance issues were applicable to both Zimbabwe (the developing) and developed worlds.

Mutasa was at pains explaining that Zimbabwe needed to develop a culture of quality, and economic agents could not attain quality from legislation.

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2.7 WTO ANTI-DUMPING MEASURES: Mr. A. Nhara, Director, Tariff Commission

Mr. Nhara kicked-off his presentation by outlining that the Agreement on the implementation of Article VI of GATT 1994 governs the application of anti-dumping measures by WTO members. These measures are unilateral remedies which may be applied by a member after an investigation and determination by that member, that an imported product is „dumped" and that the dumped imports are causing material injury to a domestic industry producing the like product.

For the purposes of trade policy, dumping was assumed to refer to the conduct of individual firms that see some advantage in discriminatory pricing arrangements and that finance these from their own resources.

The Anti-Dumping (AD) Agreement was however more specific and „a product is considered being dumped", if its export price is less than the price at which a like product is sold for consumption in the exporting country. The Agreement laid down certain substantive rules and detailed procedural requirements, which if not followed can be taken to dispute settlement and may be the basis for invalidation of the measure.

With regards the substantive rules, Article 1 of the AD Agreement establishes the basic principle that a member may not impose an anti-dumping measure unless it determines, pursuant to an investigation conducted in conformity with the Agreement’s provisions that there are dumped imports, material injury to a domestic industry and a causal link between the dumped imports and the injury.

Article 2 details the rules for the determination of dumping.

It contains detailed provisions governing the calculations of normal value (the price of the imported product in the „ordinary course of trade" in the country of origin or export price (the price of the product in the country of import), and elements of the fair comparison that must be made.

Rules pertaining to the determination of material injury are contained in Article 3. The basic requirement is that there be an objective examination, based on positive evidence of the volume and price effects of dumped imports and the consequent impact of dumped imports on the domestic industry.

Article 4 sets forth a definition of the domestic industry for the purposes of assessing injury and causation. The domestic industry is defined here as producers of a product that is identical to or that has characteristics closely resembling those of the imported product under consideration.

The procedural requirements of the AD Agreement are aimed at ensuring the transparency of the proceedings, a full opportunity for parties to defend their interests and adequate explanations by investigating authorities of their determinations.

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Investigating authorities are required to give public notice of and explain their determinations at various stages of the investigative process in substantial detail. Rules for the timing of the imposition of anti-dumping duties, the duration of such duties and the need for members to periodically review the continuing need for anti-dumping duties are also established in the Agreement.

Article 5 establishes the requirement for the initiation of investigations and specifies that investigations should generally be initiated based on a written request by or on behalf of a domestic industry.

Article 5.8 provides for immediate termination of investigations if the margin of dumping is de minimis i.e. less than 2 percent expressed as a percentage of the export price or if the volume of exports from a particular country is less than 3 percent of all imports of like products into the importing country. Article 5.10 specifies that investigations shall be completed within one year, and in no case more than 18 months, after initiation.

Mr. Nhara noted that attention should be drawn to Article II of the Agreement which establishes rules for the duration of anti-dumping duties, and requirements for periodic review of the continuing need, if any, for the imposition of anti-dumping duties. The so called „sunset" requirement establishes that dumping duties shall normally terminate no later than 5 years unless a review investigation established that expiry of the duty would likely lead to continuation or recurrence of dumping and injury.

The main benefits to be derived from the agreement stem from the fact that the agreement elaborates the rules for applying anti-dumping measures foreseen in the GATT 1947 and those laid down in the Tokyo Round Anti-dumping Code. The agreement provides clearer and firmer rules regarding imposition of anti-dumping measures. Additionally, transparency of anti-dumping procedures is enhanced thus limiting the abuse of the instrument for protectionist purposes and harassment of trade. The interests of developing countries are mainly secured through the greater transparency, uniformity and predictability in the implementation of anti-dumping rules.

He noted that Article 15 of the Agreement recognises that special regard must be given to by developed country Members to the special situation of developing countries when considering the application of anti-dumping measures. Possibilities of constructive remedies provided for by the agreement shall be explored before applying anti-dumping duties where they would affect the essential interests of developing country Members.

While Zimbabwe has not applied any anti-dumping duties to date, it nonetheless shares the concerns of other developing countries raised in regional groupings such as Comesa, SADC, Africa Group, ACP and others. Zimbabwe also notes with concern the highly complex and technical nature of the agreement and urge Members to explore the possibility of evolving a simplified procedure for undertaking anti-dumping actions.

There is also a need for the simplification of the procedural requirements as they relate to the data required to determine injury, definition of a product motivating investigation and

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the „standing" of petitioners, i.e. the requirement that petitioners should have a collective output of more than 50 percent of the total production of the like product.

Developing countries would like the de minimis margin of dumping, currently at 2 percent below which no anti-dumping duty can be imposed to be raised to 5 percent for their exports. Additionally, the volume of dumped imports, which shall normally be regarded as negligible, should be increased from the existing 3 percent to 5 percent.

Article 15 provides for special and differential treatment for developing countries. Developing countries feel that its provisions should be made operational and mandatory.

The foregoing concerns constitute possible negotiating objectives for Zimbabwe during and after the Seattle meeting. The Tariff Commission has produced a Draft Anti-Dumping Legislation in line with the provisions of the WTO Agreement for consideration by the various stakeholders before it becomes law. Various capacity building programmes are being run in collaboration with the Board on Tariffs and Trade (BTT) of South Africa who have extensive experience with anti-dumping issues.

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

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