New LDC accession guidelines could harm LDCs, say NGOs

Original Publication Date: 
27 July, 2012
LDC Accession Guidelines Ltr-OWINFS July 24 2012.pdf29.89 KB

Published in SUNS #7420 dated 27 July 2012
Geneva, 26 Jul (Kanaga Raja) -- The proposed new guidelines for the accession of the Least Developed Countries (LDCs) could seriously harm, rather than help, the LDCs in their accession process, and governments should oppose the current package and send it back for re-negotiation and improvement, a number of civil society groups have said.
This warning came in a statement signed by some 65 non-governmental organisations (NGOs) and issued just before the General Council took its decision on 25 July on the new LDC accession guidelines.
According to the statement, the proposed "Addendum" to the 2002 LDC Accession Guidelines includes language which seems to acknowledge the difficulties that LDCs encounter in their accession processes.
However, said the NGOs, the guidelines include benchmarks that would require more liberalization commitments in some areas than the damaging past LDC accession packages which gave rise to the very need for new guidelines in the first place.
"Scandalously, the guidelines even include commitments that are more comprehensive than the commitments of some developed countries," the NGOs added.
The statement was signed by several international and regional organisations including ActionAid International, Asian Peasant Coalition (APC), Development Alternatives with Women for a New Era (DAWN), Dignity International, Eastern Europe, Caucasus and Central Asia Network on Trade and Sustainable Development (EECCA), Oxfam, Pacific Network on Globalisation (PANG), and Third World Network.
Some fifty-seven national organisations also signed on to the statement.
In their statement, the NGOs said that last spring, nearly all WTO Members agreed on the need to approve a set of policies to improve opportunities for the LDCs to use trade for their development.
Unfortunately, said the NGO statement, the United States stymied these efforts. Instead of real policy change for LDC members, a "consolation prize" was agreed to at the December 2011 Ministerial, in which members committed to change the guidelines for LDC accession.
It was agreed that the guidelines should help LDCs, which face innumerable challenges in their accession processes, ensure a fair accession package which allows LDCs to use trade for their development, without creating burdensome demands that would hinder their future development prospects, the NGOs said.
"Unfortunately, the proposal that has just been forwarded to the General Council for a vote on 25 July could seriously harm, rather than help, LDCs in their accession process."
On goods, the statement cited Article 7 (of the new guidelines) which states that "acceding LDCs shall bind 95 per cent of their non-agricultural tariff lines at an overall average rate of 35 per cent."
According to the NGOs, the LDC group had proposed to bind only 48% of non-agricultural tariff lines at an average of 44%. Requiring LDCs to bind their tariffs at the low rates (set in the new guidelines) would sharply curtail their ability to use infant industry protection to industrialize and protect domestic jobs the way that developed countries did.
On agriculture, the groups noted that Article 5 (of the new guidelines) requires acceding LDCs to bind 100% of agricultural tariff lines at an overall average rate of 50 per cent, although Iceland and Norway are developed countries which have average bound agriculture tariffs of 109% and 131% respectively, and many other developing countries have agricultural tariffs far in excess of 50%.
The LDC group had asked for an average bound agricultural tariff of 79%. This loss of Food Sovereignty is unacceptable for farmers' livelihoods and for protecting Food Security.
"These steep tariff cuts could cause a permanent loss in tariff revenue, which is the source of more than 76% of government revenue of many LDCs according to the International Monetary Fund. This could result in a drastic reduction of health and education budgets," the statement said.
On services, the NGOs said that instead of including guidelines proposed by the LDCs that would be based on the average number of sectors committed by original LDC WTO members, the guidelines imply that LDCs can be required to commit up to as many services sectors as the most liberalized existing LDC WTO member, which is nearly 100%.
"Given the lack of regulation that led to the global financial crisis, LDCs should not be forced to open their banking sector, let alone public services like education that are key for development."
The guidelines also fail to protect LDCs from excessive demands on intellectual property rules (called TRIPS+) which have been demanded recently of LDCs, and which the United Nations Special Rapporteur on the Right to Health has said make it difficult for states to comply with their obligations regarding the right to health. They also fail to protect LDCs from demands to open their government procurement.
"The current drastically unfair negotiations process, in which any WTO member may make any demand upon an acceding country, effectively making the negotiations 155 against one, is not addressed. The guidelines even fail to include the small but important improvement proposed by LDCs, to conduct market access negotiations multilaterally," said the NGOs.
They highlighted that these are but just a few of the problems with the proposed Addendum to the LDC guidelines.
"It is important to note that these guidelines would also impact other developing countries in accession, since non-LDCs would presumably be asked to take on commitments even more comprehensive that those outlined in the Addendum. They would also impact countries in customs unions with either LDC or non-LDC acceding countries."
The NGOs therefore urged governments to oppose the current package, and send it back for re-negotiation and improvement before it is accepted by the WTO membership.
"The future development prospects of farmers, workers, small businesspeople, and consumers in LDCs should not be sacrificed just to meet a deadline. It would be most hypocritical if WTO members were to agree to guidelines that are unfair to LDCs in the guise of helping them. It was the United States alone which blocked the LDC package in 2011."
The NGOs urged developed and developing governments alike not to be complicit in accepting a "consolation prize" which harms acceding LDCs even further.
"Instead, the Addendum should be revised to contain a process and terms, at the very least along the lines of the November 2011 proposal by LDCs, which would allow acceding LDCs access more of the policy flexibility they need to use trade for national development, based on decent job creation and inclusive sustainability, in accordance with their current level of economic and social development."