WTO, South Africa, and the Doha Development Agenda: Opportunities and Challenges

1. THE WTO, SOUTH AFRICA AND THE DOHA DEVELOPMENT AGENDA Presentation to the Select Committee on Economic and Foreign Affairs 26 August 2003

2. PRESENTATION OUTLINE • Brief introduction to the WTO • Context and background • South Africa’s objectives in Doha • Areas of negotiation and discussion • Implications of the Doha outcomes for South Africa • Challenges for South Africa • Opportunities for South Africa

3. 1. Brief introduction to the WTO • Established 1 January 1995 as successor to the GATT • Deals with the rules of trade between nations • Three main purposes: • To help trade flow as freely as possible • To serve as a forum for trade negotiations • To settle trade disputes • The main principles: • Trade without discrimination (MFN, NT) • Barriers to come down through negotiations • System should be predictable (rules-based) • Trading system should be more competitive (by discouraging “unfair” practices (e.g. export subsidies and dumping)

4. 2. Context and background • Addressing the legacies of apartheid • Uneven development • Skewed ownership/income patterns • Appalling poverty in its many ugly faces • Unemployment • Job creation • Attracting investment • Market access • Improving competitiveness • Economic growth

5. 3. South Africa’s objectives in Doha • To ensure that developmental issues are at the centre of WTO agenda and the MTS • To address the imbalances in existing WTO agreements • To strengthen the rules-based MTS vs Unilateralism • To reduce protectionism against products of exports interest to SA and other developing countries, esp. in agriculture • To ensure meaningful African participation

6. 4. Areas of negotiation Between 2001 and 2005 • Agriculture • Implementation of existing WTO obligations • Services (more than 10 sectors) • Industrial Tariffs • TRIPS • Anti-dumping • Subsidies (incl. Fisheries subsidies) & CVDs • Relationship btwn RTAs and the WTO • Dispute Settlement • Trade and Environment

7. 4. Areas of substantive discussions with view to launch negotiations • Trade and Investment • Trade and Competition • Transparency in Government Procurement • Trade facilitation (CTG)

8. 5. Implications of Doha outcomes In agriculture • This is a ‘grandfather’ sector in developed countries • Agreement on comprehensive negotiations aimed at: • substantial improvements in market access • reduction and eventual “phasing out” of export subsidies • substantial reductions in trade-distorting domestic support Implications: • break EU CAP; • unlock developing country potential and comparative advantage; • market access opportunities;

9. 5. Implications of Doha outcomes Cont. In intellectual property rights and public health • TRIPS Agreement does/should not prevent members from taking measures to protect public health • TRIPS Agreement should support the right of countries to protect public health • To promote access to medicines for all (compulsory licensing) Implications: • strengthen govt. hand to address public health issues; • access to medicines for all

10. 5. Implications of Doha outcomes Cont. Antidumping and other rules • Agreement to clarify and improve disciplines (antidumping, subsidies & countervailing measures) • Identify trade distorting practices • Clarify and improve disciplines on fisheries subsidies Implications: • Scope to address the abuse of AD and S&CVMs • address protectionism • promote market access • fair competition

11. 5. Implications of Doha outcomes Cont. Industrial tariffs • Agreement to reduce/ eliminate tariff peaks, tariff escalation, high tariffs, and NTBs • Market access particularly for DC exports Implications: • address protectionism • open markets for DC exports • unlock comparative advantage of SA and other DCs • positive spin-offs on job creation, economic diversification, product beneficiation,

12. 5. Implications of Doha outcomes Cont. Services • Negotiations to be conducted with a view to promoting economic growth and development Implications: • further liberalisation • focus on developmental issues • support economic growth of DCs and LDCs • market access opportunities for DC services

13. 6. SA preparatory process • Two-staged preparatory process • Domestic consultations with stakeholders, incl. • Various government departments • Parliament • Labour • Business • NEDLAC • Service providers/regulators, etc • Actual negotiations in WTO Bodies, e.g. • TRIPS and public health • Industrial tariffs • Agriculture

14. 6. SA’s negotiating positions 6.1 On rules, e.g. • Cumulation rules to be addressed • Negligible margins to be raised 6.2 On services • SA received requests from many countries, • Mining, engineering & construction, telecoms, health, education, architecture, insurance, etc • SA has developed requests to other countries • Mining & engineering, communications, energy, financial, etc

15. 6. SA’s negotiating positions Cont. 6.3 On agriculture, e.g. • Domestic support • Fully support development of historically disadvantaged farmers, rural & farming communities • Support commercial farmers thru non-distorting measures • Substantial market access for agric products of export interest/potential to SA • Improve fair trade conditions for agric products

16. 6. SA’s negotiating positions Cont. 6.4 On TRIPS & Public health • Chair’s text of 16 Dec 2002 as basis for consensus • No limitation on scope of diseases • Members to be allowed the flexibility to decide for themselves the grounds for granting compulsory licenses • Domestic market to also include the “regional market” 6.5 On geographical indications • Voluntary system of registration • No extension of protection to other products

17. 6. Challenges for South Africa • Preparing for and participating in a complex set of multi-layered negotiations • Developing SA’s ‘negotiating positions’ thru effective consultations with all relevant stakeholders • Providing leadership • Building coalitions • Defining what ‘development agenda’ means in hardcore negotiations (NEPAD?) • Capacity (human & institutional) constraints

18. 7. Opportunities for South Africa • Relative strength/health of the economy • Sufficiently developed institutions with memory • Availability of expertise/ skills • Better understanding of WTO in govt. and social partners • Position of leadership • Relative clarity of policy and policy framework (e.g. SAGES, NEPAD)

19. Road to Cancun • 5th Ministerial Conference, Cancun, 10-14 September 2003 • Midterm review • Take stock of developments to date • Ministers to provide guidance • Draft Ministerial Text is out (24 August 2003) • Very ambitious on investment, competition, transparency in government procurement, and trade facilitation • Accelerated progress on services • Ambitious tariff cuts on industrial products • Non-committal on S&DT • Offers the recent EU-US deal on agriculture as the deal • Cancun meeting is going to be very tough!

20. . KE A LEBOHA!