Free trade and investment for
growth and development
Hans Ekdahl
August, 2003
2
Contents
1
Free trade is a win-win proposition
4
2
Benefits of free trade
6
3
A market economy is the best basis for sustainable
development
10
4
Will special and differential treatment help development?
11
5
The long-term objective should be zero duties for all
industrial goods
12
6
Trade in services will be enhanced through a stronger
GATS agreement
13
7
International farm trade should be liberalised
14
8
The WTO should push for trade facilitation and remove
non-tariff barriers
17
9
Foreign direct investment is important for economic
development everywhere
18
10 Free trade promotes a better environment
19
11 The TRIPS Agreement allows for cheap medicines
against third world epidemics
20
12 Free trade for textiles and clothing is important for
developing countries
21
13 More open and transparent public procurement will
help economic growth
22
14 Clear rules are needed on dumping and government subsidies 23
15 Promote common international principles for competition
24
16 Summary – Important objectives for the new WTO round
25
3
Preface
Trade and investment have always been the main engines of world economic development. This is no
less true today than 2000 years ago. Trade and investment are a win-win game and the most important
instrument for poor countries to achieve self-sustaining growth. Free trade and free enterprise are core
values of the Confederation of Swedish Enterprise, which is the main business organisation in
Sweden, representing close to sixty thousand companies with more than 1.5 million employees in
forty-eight sector federations across the Swedish economy.
The issues of trade and investment are central to the ongoing WTO negotiations on the Doha
Development Agenda. Is trade conducive to faster growth? Is trade compatible with a sustainable
environment? Is protection of intellectual property a good thing for developing countries?
Is foreign direct investment good for developing countries?
We believe that the answer to all these questions is yes. This booklet sets out to summarise why we
think so, and why it is important for the entire world economy that the ongoing WTO negotiations will
be a success.
This booklet also gives a background view to our priorities for the WTO negotiations, which we
introduced in a special publication in 2002. It is written by Hans Ekdahl, director of trade policy at the
Confederation of Swedish Enterprise, in co-operation with Ingela Bendrot (sustainable development),
Jens Hedström (trade in services), Therese Kreuer (intellectual property), Charlotte Nyberg (trade and
environment, technical barriers to trade) and Fredrik Segerfeldt (development issues). Margaretha
Swanström has assisted with competent editing and formatting.
Göran Norén
Vice President, International Trade and Coordination
Confederation of Swedish Enterprise
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1. Free trade is a win-win proposition
The great advantage of free trade is that most parties win, consumers as well as efficient producers.
Inefficient producers may of course lose out, but overall free trade is a win-win proposition. Free trade
and free enterprise were instrumental in lifting Sweden from the position as one of the poorest
countries in Europe in 1870 to one of the richest in 1970.
Sweden’s road to prosperity
In the mid 19th century Sweden was one of the poorest countries in Europe, with high infant mortality,
occasional famines and massive emigration, ultimately draining the country of one quarter of its
population. In today’s vocabulary, Sweden was then a developing country. Just as in today’s
developing countries, working hours were long, working conditions were bad, and the spectre of
famine loomed when harvests were poor. The educational level was low and child labour was
common.
One hundred years later, in 1970, Sweden was one of the richest countries in the world. With Japan,
Sweden was the country with the fastest economic growth over this period. A number of reforms
leading to the abolition of the old guilds and all kinds of restrictions on trade were introduced in the
middle of the 19th century. Anyone could now start a company in any industry. At the same time tariffs
on imported goods were lowered or abolished.
All these reforms were introduced without any aid from other more developed countries.
However, the Swedish government as well as private companies borrowed heavily abroad to finance
the construction of new infrastructure, mainly railways, as well as new factories and mills. Sweden
utilised all the opportunities, which were opened in the late 19th century by domestic economic
liberalisation, new technology and an open world market. Stable political conditions and a public
administration and a political leadership which were growth-oriented also helped in this development.
Many countries have grown even faster
Many other countries have also made great strides towards prosperity over a remarkably short period
of time. As was mentioned earlier, Japan developed at a similar speed as Sweden. Later, other
countries have developed even more rapidly. In the second half of the 20th century, the Republic of
Korea has made spectacular progress, when, in only thirty years, it catapulted itself from third-world
status to the ranks of a fully industrialised and democratic nation by taking full advantage of the
opportunities of new technology and an open world market. By contrast, North Korea, which
consistently has chosen a development model based on self-reliance and a planned economy with very
limited foreign trade has reached a dead end with starvation, oppression and increased political
desperation.
Recently China, the most populous country in the world, embarked on the same journey to prosperity
as Japan and South Korea have already travelled. For over thirty years China tried in vain to develop
along the lines of a planned economy in isolation from world markets. Since twenty years, however,
when she embraced the market economy, China has had the fastest sustained growth in the whole
world, and will very likely become the second largest economy in the world within ten years.
Whereas others have failed
On the other hand, there are many countries in the world, which have still not embarked on their
journey to prosperity. There are even those that have made a reverse journey back from prosperity to
renewed poverty. Those are usually countries, which have followed a protectionist policy trying to
shield their domestic industries through import quotas and high tariff walls.
Countries like Argentina and Brazil have had good prospects for development, but they have largely
missed the opportunity to build internationally competitive industries geared to serving world markets.
5
Instead, since the 1950s, they have tried to build domestic industries to serve national markets behind
high protective walls, thus missing to take advantage of the opportunities of international trade.
A hundred years ago Argentina was one of the richest and most promising economies in the world.
Through a protectionist trade policy and an irresponsible industrial policy it is now on the verge of
becoming a third world country once more. The grandchildren of the immigrants who left
impoverished parts of Spain and Italy one hundred years ago now queue in front of the embassies of
Buenos Aires to be able to return to Europe.
In the same manner India and its neighbouring countries, as well as most countries in Africa and the
Middle East, have locked themselves into stagnation and continued poverty by trying to protect vested
interests and existing low-productivity industrial structures. Mexico, on the other hand has a positive
development over the last ten years thanks to the NAFTA free trade agreement with the US and
Canada.
Another illustration of the importance of free trade is the effects of the great depression of 1929 –
1933, which was a catastrophe both for developed and developing countries. After one country after
another stopped imports through high protective duties, world trade was halved within three years.
Industrial production in the US and in Germany was halved within four years, and unemployment rose
massively. In some countries this paved the way for dictatorships, which used public works and
armaments programs to boost the economy. Trade also slumped all over the world, especially in
export-oriented countries such as China and Japan.
A more recent example is that in the 1990s, developing countries that were open to free trade grew by
average of 5 percent per year, whereas those countries that pursued a more protectionist trade policy
actually had negative growth, so that people in those countries became poorer, not only in relative but
also in absolute terms. In fact no country has had a rapid but sustainable economic development
without a strong development of foreign trade.
Conclusion
When we summarise the lessons of the 20th century, it is evident that the dramatic development of
Sweden and other countries through free trade in the 19th century was no coincidence, but the result of
policies, which have worked in many different kinds of countries at different periods of history. The
same goes for countries that developed prosperity later during the 20th century.
Today there are still more than one billion people who live in extreme poverty. Many countries are
stuck economically in the same position as that of today’s industrial countries one or two hundred
years ago. It is urgent that these countries try to embark on the same journey that Japan and South
Korea have accomplished and where China and Mexico find themselves at this moment. The sooner
they start, the sooner they will reach their destination.
Poverty is rooted in the lack of resources, which can be overcome only through economic growth.
Redistribution cannot by itself solve the problem of world poverty. It may in fact, if tried as the only
solution, create more poverty, since it may lower the rate of investment and growth.
Therefore growth is central to the discussion of trade and development. In fact, trade is one of the most
growth-enhancing factors of any economy, and there is a strong link between trade and development.
The faster world trade grows, the more people are freed from the shackles of poverty.
6
2. Benefits of free trade
Free trade has several practical advantages:
• Economic growth. For an economy to growth companies must develop under constant competition.
Free trade increases competition and is a precondition for increased efficiency and higher living
standards.
• Consumer welfare. Competition leads to lower prices and a larger choice for consumers.
• Faster innovation. Free trade gives stronger incentives to develop new technology and new
products, and speeds up their dissemination. Trade barriers hold back the free flow of ideas and
technology between nations, and slow down development.
• Improved transparency . Open and competitive free trade means that more people can participate,
making the system more predictable and transparent
The fact that trade promotes growth and prosperity has been recognised since time immemorial.
Therefore we shouldn’t be surprised to see, as argued above, that those countries, which have based
their development on free trade over the last decades have improved their situation, while those who
have closed their borders have fared less well.
Trade leads to faster economic growth in at least three ways:
• Trade promotes specialisation and the division of labour.
• Trade increases competition.
• Trade speeds up the restructuring of the economy.
Specialisation and the division of labour
The division of labour and specialisation is fundamental to growth in productivity, both between
individuals at a local level and between countries and companies at an international level.
Specialisation enables individuals, companies and countries to take full advantage of their relative
strengths, or their comparative advantages as economists would say.
This means that even for those who are not best in absolute terms, there are always some activities
where they are better off if they specialise and trade, than if they try to do everything for themselves.
In the old days natural advantages such as mineral and agricultural wealth were the most important
ones, but today knowledge and institutional advantages have increasingly become more and more
important. These new factors are more easily influenced by government policy than the old ones were.
This means that today countries can do more to improve their comparative advantages than they could
in the old days, when nature gave Portugal a comparative advantage for wine and Britain a
comparative advantage for wool.
In South Korea education and sound economic governance have played an important role in its
phenomenal growth over the last fifty years. In Ireland, sound tax and industrial policies, in
combination with investments in education have launched this country from being one of the poorest
in Western Europe to one of the richest, moving straight from a predominantly agricultural economy
to a service-oriented one, more or less skipping the stage of smokestack industries.
Increased competition
Another important factor behind economic growth is competition. When companies have to compete
for the favour of consumers, they are forced to offer ever better products at ever-lower prices. It is
sufficient to look at the design and relative price of a car or a television set today, and to compare
7
thirty years back, to realise the dynamics of product development and competition in free and open
markets. If we also look at the ”made-in” label of various products today and compare thirty years
back, we realise that international trade plays a major role in this process. Even when we still find
locally made products, they have developed beyond recognition thanks to competition from abroad.
Through this process, we not only get the survival of the fittest companies, but we also save resources
by utilising the most efficient production processes and production conditions all over the world. It is
therefore not correct to say that trade promotes wasteful production. On the contrary, it promotes
resource-efficient production
Rapid structural change
Free trade leads to more rapid structural changes than in closed economies. Companies are forced to
abandon or relocate production when conditions are not competitive any more. This kind of change is
natural and beneficial for all societies in order to develop and prosper. Resources allocated to less
efficient production are the set free to be used for more productive purposes, allowing prices to go
down and wages to go up.
Thirty years ago, Sweden was the second largest shipbuilding nation in the world. However it soon
became apparent that other countries were more efficient in building large bulk carriers. Some
specialised equipment makers remained in business, but shipbuilding as such moved to Asia. Workers
were retrained and soon found other, better paid jobs. A similar development occurred with the
clothing industry. While design, and some specialised textiles are still made locally, cutting and
sewing is done overseas. Instead of banging metal and sewing shirts, workers have moved on to better
paid jobs manufacturing automobiles, equipment for mobile telephony and developing computer
software.
”Where no goods cross the borders, armies soon will”
Free trade also has other, more indirect advantages. It encourages openness and discourages armed
conflicts. When goods and services move freely, people and ideas tend to move along. This means that
not only will free trade stimulate product development, it will also stimulate institutional and political
change. This was the basic idea behind the launch of the Coal and Steel Community, which became
the foundation stone of the European Community after World War II. At that time straightforward
political integration was not thinkable, but economic integration was. It was used as a tool to prevent
new wars and the final destruction of Europe in the 20th century. Since then European integration has
been so successful that many people tend to forget the original idea, since another great war in Europe
is no longer imaginable.
Economic co-operation through trade and investment can also help today’s poor and war-torn nations
to change their situation for the better. This is one important reason why developing countries should
create their own regional free-trade areas and dismantle their trade barriers against their immediate
neighbours. There is also a clear connection between growth and economic openness on the one hand
and democracy and respect for human rights on the other.
The consensus that trade liberalisation will lead to increased growth and less poverty in the world
is also the background to the WTO trade negotiations on the Doha Development Agenda (DDA):
•
•
•
If all trade barriers could be removed, world production would increase by between 250 and
620 billion dollars a year. Around one third of this growth would take place in the
developing countries.
The phasing out of farm subsidies would give additional welfare gains of 128 billion dollars
a year, of which 30 billion in developing countries
If all trade-distorting measures could be abolished, 320 million fewer people in the world
would be living below the poverty line.
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The development of world trade since 1948
Throughout the 20th century, there was a strong correlation between the development of world trade
and global economic growth.
•
•
On an average, gross domestic product (GDP) per capita grew by 2 percent per year worldwide from 1948 to 2000. During the same period world trade in goods grew by 6 percent
annually.
Real incomes world-wide were three times higher on average in 2000 than they were in 1948.
Total international trade amounted to 7600 billion dollars in 2000. 81 percent of this trade was trade
in goods and 19 percent trade in services.
Development of world trade and world production (GDP) in volume.
Exports
GDP
25
20
15
10
2000
1998
1996
1994
1992
1990
1988
1986
1984
1982
1980
1978
1976
1974
1972
1970
1968
1966
1964
1960
Source: Swedish Board of Trade
1962
1958
1956
1954
1952
0
1950
5
9
Tariffs have been considerably reduced
Average tariffs in percent
80
70
60
50
40
30
20
10
0
1978-80
1981-85
1986-90
Africa
Latin America
1991-95
1996-99
East Asia
South Asia
Industrial countries
Source: The World Bank
Liberalisations through multilateral negotiations have played an important role in stimulating world
trade. The GATT and the WTO negotiations have strongly reduced tariff barriers around the world. In
the Tokyo Round (1979) tariffs were lowered by 33 percent on average, in the Uruguay Round (1994)
by 38 percent.
However, after a strong increase in trade during the 1990s, world trade actually shrank in 2001.
With this development in mind, and the strong correlation between growth and free trade we saw
above, it is important to pursue the quest for lower tariffs and barriers to trade, since this will have a
beneficial effect on growth both in industrialised an in developing countries. This pursuit is all the
more important since the increase in world trade is slowing down.
The figures above show, furthermore, that there is still ample room for further trade expansion,
especially through more open food trade, elimination of non-tariff barriers to trade in goods and
through easier trade in services. Such initiatives could break the stalemate of the last years.
A collapse of the WTO negotiations, on the other hand, would be seen as lack of confidence of the
world community in trade as a motor for economic development. This could endanger the present
trend towards more open markets, and might lead the way back to protectionism and a continuing
contraction of the world economy.
Conclusions and action needed
Protective tariffs in other countries stop efforts to develop new exports. Protective tariffs at home
make imported equipment and inputs more expensive, and add to costs, which make local companies
less competitive in international markets. To ensure higher growth and increased living standards
around the world, all tariffs and other barriers to world trade should therefore be eliminated.
In order to create long-term growth and economically sustainable development through trade and
investment, we need:
•
A stable, open and non-discriminatory multilateral policy for trade and investment.
•
Liberalised trade between developing countries, especially at a regional level.
10
•
A more liberal trade policy in developed countries, especially for agricultural products.
•
Export subsidies for agricultural goods should be eliminated and duties lowered in all
countries.
•
Developing countries should be given technical assistance to improve the functioning of their
customs administrations.
•
Development aid should be focused on growth and economic development. Many companies
have deep knowledge about conditions and needs in developing countries.
•
Companies are also suppliers of competitive goods and services. Development aid can be
made more efficient through increased co-operation between companies and aid agencies.
•
Subsidised loans, loan guarantees and risk capital can help development. Financial risk
guarantees will enable more companies to participate in infrastructure and other projects.
3. A market economy is the best basis for sustainable
development
Sustainable development means that development must be economically, socially and environmentally
sustainable. Economic sustainability, i.e. profitability, must be achieved without damaging people,
exhausting natural resources or polluting the environment. Free trade contribute to a more efficient use
of natural resources, and is therefore central to sustainable development in a global perspective.
Experience shows that foreign companies in the great majority of cases contribute to a positive
economic and social development in the countries where they are active. An important contribution to
sustainable development is therefore to remove barriers to trade and investment, which delay or stop
development in many countries.
Corporate responsibility
Successful companies have helped hundred of millions of formerly impoverished people to better lives
all over the world. In market economies companies are forced to use all available resources in the most
efficient manner. In contrast to what happened (and happens) in planned economies, this forces them
to constantly develop new cleaner and more resource-efficient technology to produce more goods with
fewer inputs and less energy. Environmental legislation also has made goods and production processes
of all kinds less harmful to the environment.
Modern companies need well-trained and independent staff to succeed. In order to attract qualified
staff, companies have to face issues concerning the environment, non-discrimination and corporate
ethics in an active way. Globalisation also put new demands on corporate behaviour. It is necessary for
all companies to embrace non-discrimination and good conditions for all employees to be successful in
the global marketplace.
Lately there has been a proliferation of ethical codes for good corporate governance promoted by
various organisations and governments. The Confederation of Swedish Enterprise fully supports the
underlying values expressed in the UN Global Compact and in the OECD guidelines for multinational
companies. All companies have an obligation to respect human rights, core labour rights and
fundamental environmental standards, wherever they are active in the world. This can be done either
by signing up to existing codes or by developing corporate codes of conduct adapted to the special
circumstances of each company’s activities.
11
To business, the issue of sustainable development is a key issue. Open and democratic economies
attract and stimulate free enterprise, and it is in theses economies we see a transition to sustainable
development. Free speech is important to reveal illegal or improper practices, and to point at problems
such as environmental pollution, bad social conditions or anti-competitive behaviour.
Government responsibility
There are certain fundamental preconditions, which must be fulfilled to achieve sustainable
development, such as democracy, and market economy Governments must take the responsibility to
foster institutions, which enable and maintain these fundamental characteristics. They must protect
human rights and ensure the functioning of a market economy. Unfortunately there are still many
governments, which fulfil these preconditions only partially or not at all. Many countries do not
protect human rights adequately and do not have functioning democratic institutions. The market
economy is being undermined by excessive government intervention and rampant corruption.
Governments also have a responsibility for global environmental protection. In order to achieve its
objectives, protection standards for the global environment must be uniform all over the world. This
also goes for regional protection against pollution, which is why the EU insists that new members
adopt the same standards as existing member states.
4. Will special and differential treatment help
development?
Just as barriers in developed countries are an obstacle to exports from developing countries, barriers in
the developing countries themselves constitute an obstacle to development, since it makes imports of
competitive goods and services more difficult, not only from developed countries but more
importantly from other neighbouring developing countries. In fact, national barriers to trade are an
important impediment to growth in Africa as well as in Asia and Latin America. There is also a clear
link between free trade and economic growth in these countries, even if other factors are also
important in fostering economic growth, such as investment in infrastructure and education,
favourable and stable conditions for business, a sound monetary policy and other factors.
Tariff protection does not promote sustainable development
In our view, tariff protection is not a form of special and differential treatment, which is conducive to
economically sustainable development in poor countries. Maintaining tariff barriers will rather help to
perpetuate poverty and stagnation in many countries. Discussing trade and development in mercantilist
terms of mutual concessions is not compatible with a development approach to trade policy.
“Concessions” are rather to the advantage of all parties concerned so that trade is liberalised to a
maximum extent.
The Singapore issues
In our view agreements on trade facilitation, investment, transparency in public procurement and
competition can only be to the advantage of development. It is therefore hard to understand why
representatives of some developing countries are so hesitant to broach these issues and reach
agreements, which would stimulate trade and investment and improve governance in important areas
such as procurement and competition.
Technical assistance
It is of utmost importance that developing countries are given the opportunity and the means to fully
participate in the WTO trade negotiations. Assistance should not only be given for training in the legal
and procedural aspects of trade negotiations, but also to analyse the economic implications of different
trade strategies.
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Technical assistance should also be given to developing countries to improve their trade
administrations, especially their customs administrations. Cumbersome administrative procedures and
corruption contribute not only to keep imports down in these countries, they also deter exports to the
detriment of economic development.
Trade legislation and human and labour rights
WTO rules, the UN declaration of human rights and the rules and conventions of the ILO
(The International Labour Organisation) are parallel and mutually compatible legal frameworks.
Member states of these organisations have an obligation to conform to the statutes of all international
agreements they sign. National compliance is usually monitored by the organisation and its other
member states. Individual companies are of course obliged to follow laws and regulations of each
country where they are active, and these laws have to comply with the international agreements that
each state has signed.
Suggestions to link compliance and enforcement procedures of the ILO with those of the WTO have
been met with strong negative reactions from practically all developing countries. They see such links
as an attempt to create a legal basis for protectionist action in developed countries against competitive
exports from developing countries
5. The long-term objective should be zero duties for all
industrial goods
Traditionally tariff reductions have been at the centre of international trade negotiations.
The old GATT agreement mainly served as a mechanism for reciprocal dismantlement of tariff
protections between countries. From a viewpoint of economic development, this procedural set-up was
a paradox, since according to a general consensus among professional economists, economic
development is favoured by free trade even when tariffs are reduced unilaterally, whereas tariff
protection only favours individual producers at the expense of the great majority of consumers. In our
view the objective of the market access negotiations in the Doha round should be zero duties for all
industrial goods both in developed and in developing countries.
As we have said already, the economic rationale behind protective duties has often been the
establishment of a national infant industry, which would eventually reach international
competitiveness. In the great majority of cases, this objective has not been met. Instead protective
duties have often distorted industrial development and diverted scarce funds from investments in
economically sustainable activities. The burden of these failed policies has usually been borne by the
local population, in Africa as well as in Latin America, the Middle East and South Asia, where
protectionism still dominates trade policy in many countries. Tariffs are also an easy way to collect
government revenue, and have therefore always been in favour with hard-pressed finance ministers.
Our objectives for tariff reductions on non-agricultural products are:
•
A general agreement on zero duties for all industrial products in 2010.
To reach zero duties in 2010 the following steps should be achieved as soon as possible:
•
Average duties on industrial products should not exceed 10 percent in any WTO
member state.
13
•
“Nuisance tariffs” of less than 3 percent should be abolished to simplify customs
clearance.
•
Peak tariffs should be reduced to a maximum of 15 percent in all WTO member states.
•
Tariff negotiations should be based on applied tariffs, not on bound tariffs.
•
Tariffs should be harmonised within specific products areas. Tariffs on main inputs and
on finished goods should be harmonised to avoid tariff escalation (as well as deescalation).
•
Uniform principles should be established for rules of origin to be used in multilateral as
well as in regional and bilateral preferential agreements. Determination of origin should
not depend on whether the last transformation takes place at a subcontractor or in the
exporting company.
6. Trade in services will be enhanced through a stronger
GATS agreement
Open markets for services lead to a greater supply of cheap and efficient services for companies and
individuals. Efficient banking, insurance and transportation services enable the whole economy to
work more efficiently and leads to faster growth. This is especially important for low-income
countries, which typically have inefficient and underdeveloped business services. The lack of service
industries, especially business services, in former planned economies has proved to be one of the main
barriers to the development in all economic sectors of these countries.
Consumers benefit from competition in service industries directly though more efficient and cheaper
services, and indirectly because manufacturers using these services will produce better and/or cheaper
products. Open service markets also stimulate rapid dissemination of new technologies.
In the WTO, trade in services is regulated through the GATS agreement, which was signed in 1994 as
a part of the Uruguay round negotiations. The GATS Agreement is structured as a positive list, where
each country lists the service sectors where it will allow foreign companies to compete on equal terms
with domestic service providers. For practical reasons services are divided into four categories
according to mode of delivery:
Mode 1. The producer and the consumer are both in the country of production (e.g. tourism)
Mode 2. The producer is in the exporting country and the consumer is in the importing country
(e.g. electronically transmitted software and other on-line services)
Mode 3. The producer has established a subsidiary in the importing country, where the service is
provided to the consumer (e.g. banking ands insurance services). In legal GATS/WTO terms this is
trade in services, but in economic statistics this is counted as domestic activities based on foreign
direct investment.
Mode 4. The producer is personally visiting the importing country, where he provides the service to
the consumer. (e.g. installation, maintenance and servicing of equipment).
An extended GATS agreement will boost international economic growth
Service industries in all countries need to face international competition in order to boost productivity. Today,
national legislation often discriminates against foreign service providers to the detriment of consumers.
14
Restrictions often occur in connection with foreign ownership of service companies, in connection with the
citizenship of persons performing certain functions, or concerning eligibility for public procurement. Other
barriers relate to divergent and incompatible national legislation and restrictions in the free movement of key
personnel, which is central to increasing competition and productivity in service industries.
Electronic commerce
The development of electronic commerce is important both for developed and developing countries.
For developing countries, e-commerce constitutes a low-cost alternative to create to business
relationships. However, there are still many grey areas and gaps in international regulations governing
e-commerce. GATS has an important role to play in this context to establish rules which guarantee
that net-based services are not discriminated against compared to other forms of delivery, and to
ensure that net-based products remain duty free.
GATS and developing countries
Access to quality services is crucial to the economic development of all countries. By opening up to
foreign service providers, developing countries can speed up their own development. It should
therefore be in the interest of all countries to open up their service sectors to foreign competition, as
well as free domestic competition between various private service providers. Such a move would
certainly contribute to faster economic growth both in developed and in developing countries.
At the same time it should be stressed that nothing in the GATS agreement forces or will force any
country to open a certain sector to foreign competition, since its up to each country to indicate what
sectors it will offer to open up. Nor will the agreement affect the possibility for all countries to reserve
certain services for the public sector. The allegation that the GATS agreement would force countries to
privatise their public service monopolies is simply incorrect.
To make progress in the on-going GATS negotiations, developing countries must also participate
actively in the negotiations. In order to achieve this, developed countries must be prepared to open up
their markets in other areas, especially for agricultural imports. Industrial countries should also
support developing countries through technical aid to ensure that these countries will be able to use the
opportunities offered to them through a new agreement, and also to implement their commitments
correctly.
Important objectives for the GATS negotiations:
•
•
•
•
All WTO member states should pledge to remove as many barriers as possible to foreign
service providers.
An agreement on joint principles for transparency and non-discrimination in national
legislation.
Removal of discriminating rules, unnecessary bureaucracy and national legal restrictions,
especially in public procurement and concerning the free movement of key personnel.
Increasing support to developing countries, so that they can participate actively in on-going
negotiations and implement existing commitments.
7. International farm trade should be liberalised
Liberalisation of trade in agricultural products is the most controversial issue in the present WTO trade
negotiations, and the way it is handled may be crucial for the outcome of the whole round of
negotiations. The reason for this is that agricultural is perhaps the most regulated, subsidised and
protected of all industries in world
Agricultural subsidies for obvious reasons mostly occur in rich developed countries. The average cow
in the EU receives more than 2 dollars a days in subsidies, which is more than the daily income of 2.4
billion poor people in developing countries. Most WTO member countries want further liberalisation
15
of agricultural trade, and they exert hard pressure on protectionist developing countries, not the least
the EU, to open up their markets. It should be pointed out, however, that many developing countries
also pursue protectionist agricultural policies.
Free trade in agricultural goods would have a number of positive effects for
Europe:
When efficient foreign farmers are excluded from the European market food becomes more expensive for
European consumers. Because of EU border protection, the European food industry to a large extent is forced to
use raw materials of European origin. If instead they could buy less costly inputs from other countries, not only
would European consumers get cheaper food, they would also be able to compete more easily in export markets
without the need for EU export subsidies.
In addition to the direct negative effects of agriculture protection on EU consumers, it also has
important indirect negative effects for other European sectors. As potential food exporters are
excluded for their natural markets in the industrial world, their capacity to import other manufactured
goods is reduced.
Developing countries now make an explicit link between their market access for food products and
their willingness to open their markets further for imports of industrial products from developed
countries. These potential exports will far outweigh the loss of some subsidised agricultural exports in
industrial countries, so liberalisation would be profitable not only for the developing countries but also
for the industrial countries themselves. If industrial countries are not willing to open their markets to
more freer food imports, there is a risk that the WTO negotiations will reach a deadlock, which in a
worst-case scenario would lead to renewed protectionism and a continued economic slump in the
world economy.
Agricultural protectionism and the developing world
Barriers to food imports all around the world, as well as subsidies to food exports in developed
countries, limit the potential for poor countries to develop the full agricultural potential. Access to
agricultural markets in developed countries would give a great boost to agriculture in many developing
countries.
Not only do developing countries need full access to agricultural markets in industrial countries. They
also need to compete on the same conditions at home. Since the European food industry has to buy its
input at regulated EU prices, they usually need subsidies to able to compete in export markets. US
producers also get various subsidies to improve their competitiveness in international markets These
subsidies help farmers in industrial countries to drive many of their competitors in developing
countries out of business. To enable farmers in developing countries to compete on equal terms and
develop their own exports, agricultural export subsidies must be curtailed.
Agricultural protectionism is not only detrimental to development when practiced by industrial
countries. When practiced by developing countries, it tends to perpetuate a production structure based
on subsistence farming with no prospect for higher productivity or improved living standards for the
farmers themselves. A sustainable development policy to achieve reasonable living standards for
farmers must be based on commercial farming. When, for political reasons, the development goes in
the opposite direction, as we have seen e.g. in Zimbabwe over the last years, the result is an
unmitigated catastrophe both for the rural and for the urban population.
To ensure real development and higher living standards, the development towards more efficient food
production must be pursued both in developed and developing countries In today’s global economy,
food security is no longer primarily an issue of local production, but of stable political and economic
conditions which permit the development of the whole economy to create purchasing power, and of
distribution systems so that food can be channelled efficiently to consumers. Economically sustainable
agriculture today must therefore be based on free trade and competition.
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To sum it all up, the present agricultural policy of the EU and of most other industrial countries
including the United States distorts trade in agricultural goods at the expense of consumers and
taxpayers.
It also makes it more difficult for developing countries to develop their agricultural production, both
for domestic and export markets. Indirectly, it compromises market access for European industrial
products in many overseas countries, which are competitive exporters of agricultural products.
Because of the border regime of the Common Agricultural Policy (CAP), the European food industry
is obliged to use mainly EU agricultural inputs for both domestic and export production, even when
EU prices are higher than world market prices. The food industry is compensated for higher input
prices through export subsidies. Any reduction in export support must therefore be offset by lower
border protection and lower prices for domestic inputs. Today, export subsidies are the only export
support covered by WTO rules. US agricultural exports on the other hand are supported by an export
credit scheme, which at present is not covered by WTO rules.
What are the main issues in the agriculture negotiations?
The agricultural negotiations in the WTO cover three areas: market access, domestic support measures
and export subsidies. The mandate also refers to non-trade concerns such as food security,
development needs, rural development, environment protection and food and animal health and safety.
The special and differential needs of developing countries are to be taken into account.
In order for the WTO negotiations to help speed up global economic recovery and faster growth in
developing countries, international trade in agricultural goods needs to be liberalised. Liberalised farm
trade is also a precondition for improved market access for exports of industrial goods from developed
countries to developing countries.
Our objectives for the WTO negotiations on agriculture:
•
To achieve a considerable liberalisation of agricultural and food trade by reducing
border protection and all kinds of export subsidies and market-distorting production
support.
•
To regulate internationally and gradually eliminate all forms of export subsidies in
parallel with a corresponding reduction in internal EU prices for agricultural inputs.
•
To gradually eliminate domestic trade-distorting support measures.
•
To secure competitively priced agricultural inputs to European manufacturers.
•
The three main areas of negotiation, market access, domestic support measures and
export subsidies, must be treated in a balanced manner, so that the competitive situation
of the European food industry is not compromised.
•
Improved market access for agricultural exports from developing countries through
cross-the-board tariff reductions and elimination of peak-tariffs and tariff escalation.
•
Improved market access for EU exports of processed agricultural products in high-tariff
industrial and emerging markets through mutual tariff reductions.
•
The multifunctionality of agriculture in areas such as rural development, landscape and
environmental protection, biological diversity etc must not lead to hidden protectionism
or a distortion of production conditions between WTO member countries.
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•
The use of the precautionary principle to promote safe food products should be based on
scientific evidence.
•
Developing countries may be given special and differential treatment for border
protection and internal support measures in order to secure domestic food supply.
8. The WTO should push for trade facilitation and
remove non-tariff barriers
As tariffs have gradually been lowered, non-tarriff barriers related to customs- and trade procedures
and technical barriers to trade (TBT) remain important obstacles to the growth of trade. Most
companies today rank barriers such as slow, cumbersome or corrupt customs clearance as a more
important obstacle to market access than tariffs, quotas and licensing requirements. Technical barriers
(TBT’s) are often product requirements related to regulations, standards, testing and labelling. Costs
escalate when companies have to adapt their product to different product requirements, go through
multiple testing and are delayed in putting their product on the market.
In many developing countries, corruption and cumbersome customs bureaucracies constitute a major
obstacle not only to imports into these countries, but also to their own exports. Therefore it is
especially important that developing countries support the inclusion of negotiations on trade
facilitation into the Doha Development Agenda. Progress in this area be of great help to exporters in
many developing countries, especially new ones who often face substantial hurdles both from their
own customs authorities and from those of the importing country.
It is becoming more and more difficult for exporters in developing countries to deal with all the
product and labelling requirements on our markets. These requirements form part of complex systems
of national and local standards and product approval schemes, some private and some tied to
government regulation.
In order to facilitate for developing countries, we need to strengthen the WTO/TBT code and its
implementation, encourage further regulatory cooperation and harmonisation and strengthen the role
for international standards. Developing countries also have great difficulties implementing and
applying the WTO/TBT Agreement and Standards Code of Good Practice. Another big problem for
developing countries is the lack of test facilities and lack of awareness of international standards.
In the on-going Doha round of negotiations, the WTO should therefore:
1. Take a decision to start negotiations on trade facilitation and deal with custom and trade
procedures.
2. Raise the WTO ambition from merely eliminating technical barriers to encouraging members to
regulate with the purpose of facilitating market access and trade. Regulations, standards and
conformity assessment procedures should be designed and implemented not only with the aim of
avoiding “unnecessary obstacles to trade” but also keeping in mind the WTO obligations of to regulate
only when necessary, to keep regulations proportional to the purpose and to use the least traderestrictive means of regulation as well as basing regulations on international standards.
3. Strengthen the agreement on technical barriers to trade by
• Introducing new mechanisms for addressing technical barriers to trade, including a private
right of action and a new TBT problem-solving mechanism.
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•
Strengthening the obligation for members to comply with the key WTO/ TBT principles such
as proportionality, necessity, least trade-restrictiveness etc.
•
Strengthening implementation of the “Standards Code of Good Practice” (Annex 3 to the TBT
Agreement) and clarifying the definition of “international standard”, for instance by referring
to the national delegation principle.
•
Introducing stronger obligation and incentives for regulatory cooperation with the goal of
harmonisation/equivalence.
•
For appropriate sectors, promoting a model for best regulatory practice based on common
regulatory objectives and supporting Suppliers’ Declaration of Conformity (without the need
for mandatory third-party involvement) as the most efficient and least trade-restrictive
procedure to demonstrate compliance.
•
Developing a Code of Good Practice for Conformity Assessment under the TBT Agreement to
foster acceptance of foreign conformity assessment results.
9. Foreign direct investment is important for economic
development everywhere
Foreign direct investment (FDI) is one of the most important external factors for faster growth in
developing countries. Profitable investment will lead to further reinvestment and growth in
employment without government support or foreign aid. Even for relatively generous aid donor
countries such as Sweden, which in 2000 spent around 1.5 billion dollars for development aid, this
figure is dwarfed by the size of Sweden’s foreign direct investment in developing countries, which
exceeded 4.5 billion dollars. Swedish-owned companies also employ over 170,000 people in
developing countries, thereby providing a livelihood for an even larger number of persons.
Compared to government aid, which requires additional funding every year, foreign direct investment
creates economically sustainable self-generating growth. FDI therefore probably plays a greater role in
world economic development and poverty reduction than government aid. Growth-enhancing foreign
direct investment therefore has a central role to play in the fight against poverty in developing
countries.
This does not mean that aid is not needed, but it more than today it must focus on creating the
preconditions for economic growth. Private business will remain the main force in economic
development all over the world. In order to help reduce world poverty it should be encouraged, not
discouraged, to engage in developing countries. The debate about poverty reduction should start from
the fact that companies are not a problem but a solution for faster development in poor countries.
As was mentioned earlier, infant industry protection has not been a successful strategy to promote
viable growth in third world countries in most cases, even if it has previously been a part of over-all
successful growth strategies in some East Asian countries. However, in many more countries in South
Asia, in the Middle East, in Africa and above all in Latin America, tariff protection has spawned a
proliferation of inefficient and unprofitable investments, which not only have failed to provide the
local markets with cheap and high-quality goods, but also have lead to government debt, stunted
growth and lower living standards for local people.
As a contrast, China, which is the fastest-growing major economy in the world today, relies to a very
large extent on foreign direct investment to increase its exports and to sustain its over-all growth.
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An investment agreement in the WTO could help to increase foreign direct
investment
Investment agreements, whether bilateral or multilateral, are one of many factors, which can help to
attract foreign direct investment, but it is far from the most important one. Among more important
factors one should especially mention a favourable business climate, well-functioning infrastructure,
physical security, the rule of law and legal predictability, and of course, a large or rapidly growing
domestic market.
An investment agreement can create additional predictability, but will never be sufficient if several of
the more important factors are missing. In particular, discriminatory rules applying only to foreignowned companies will not be helpful to attract foreign investors.
For a WTO agreement on investment to have the intended effect to stimulate foreign direct investment
in developing countries, it must remove discrimination against foreign investors and other important
impediments to foreign direct investment, especially:
•
•
•
•
•
•
Regulatory or market discrimination vis-à-vis other local or foreign competitors.
Requirements for joint ventures or local majority ownership.
Local content requirements or export performance requirements.
Restrictions on profit remittances, royalty payments or licensing fees.
Lack of guarantees against negative post-investment regulatory changes.
Insufficient notice when new regulations are implemented.
10. Free trade promotes a better environment
Trade allows for production to concentrate in areas with abundant and cheap natural resources or a
favourable climate. Because of this it helps to lower the over-all environmental impact of this
production compared to a situation with dispersed and inefficient local production. Dispersed
production may create a less visible local environmental impact at each production site, but may at the
same time contribute to higher emissions on a global scale for a certain amount of goods produced.
Less efficient dispersed production will of course also make the goods more expensive to the
detriment of poor consumers.
The WTO agreement clearly allows for both free trade and protection of the environment, health and
safety. The agreement gives ample room for precaution, including trade measures to protect the
environment as long as these measures are justified and do not constitute discriminatory trade barriers.
Companies today take their environmental responsibilities seriously
Most companies today approach environmental issues from a life-cycle perspective, integrating both
the production processes and the product itself in the work to achieve an environmentally sustainable
production. Many companies have made great progress in adapting their production processes and
products to new and stringent environmental demands.
Multilateral environmental agreements (MEAs) and the WTO
The WTO rules on technical barriers to trade per se are perfectly compatible with existing multilateral
environmental agreements. It is then up to individual member states to ensure to implement the
agreements they have signed. Individual companies must follow these national rules in all countries
where they are active.
In order to avoid environment-related trade disputes between countries, the interrelationship between
WTO MEA rules should be clarified. Increased co-operation, information exchange and observer
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status for MEA secretariats in the WTO will help to defuse potential conflicts and to enhance the work
of the WTO Committee for Trade and Environment.
Environmental labelling
Business has a long experience from developing and using different types of voluntary environmental
labels. In this area market forces and customer demand have been a stronger driving force than
government regulation. A side-effect of this is that competing national and regional eco labelling
schemes are fragmenting the market and making market access more difficult for SMEs and exporters
from developing countries.
At present, there are no guarantees that criteria for environmental labelling are defined in an open,
transparent and non-discriminatory manner according to internationally agreed guidelines for
standardisation activities. Many labelling systems develop into national or regional monopolies, which
restrict competition and market entry in an arbitrary manner. Small and medium-sized companies as
well as exporters from developing countries often face insurmountable administrative and economic
hurdles when they try to certify their products according to prescribed procedures.
A discussion on eco-labelling in the Doha round is therefore welcome both from a business and from a
consumer perspective. There is a need for harmonisation or mutual recognition between the different
national and regional systems. Business organisations, NGOs and politicians all need to work towards
such a development.
Furthermore, it is important to recognise that there are several different types of eco labelling (Type 1
- 3) and that it is only a small number of companies that use the type 1 consumer product labelling
favoured by many NGOs and politicians. Each company should be able to decide which type is the
most efficient, depending on the product, customer demand etc. Many companies have moved on from
eco-labelling to product declarations where they can integrate environment, health and safety along
with social aspects all in one system and from a life cycle perspective.
We expect the Cancún WTO Ministerial Conference to start negotiations on labelling in general and
eco-labelling in particular. These negotiations should aim at improving transparency and facilitating
trade, encouraging harmonisation or equivalence of different regional and national labelling schemes.
It should be explicitly established during the on-going WTO negotiations, that environmental
labelling clearly falls within the remit of the WTO/TBT Agreement. If this cannot be achieved, a
new WTO code of conduct should be established for environmental labelling. Governments
should also encourage international harmonisation of national and regional environmental labelling
systems through mutual recognition of each other’s criteria in order to avoid unnecessary costs for
double certification. This is especially important for small companies and exporters in developing
countries trying to enter new markets.
11. The TRIPS Agreement allows for cheap medicines
against third-world epidemics
Intellectual property protection helps economic development in both developed and in developing
countries. The WTO Agreement on Trade-related Aspects of Intellectual Property Rights (TRIPS) sets
minimum standards for IPR protection in connection with international trade.
TRIPS and development policy
From a development policy point of view it is interesting to compare the attitude of the Chinese and
the Indian authorities to the protection of intellectual property rights. In India there has been a
sceptical attitude ever since the introduction of the patent law in 1970. This is reflected in a low
21
number of patent applications both from domestic and foreign applicants. China, on the other hand,
has always stressed the importance of intellectual property rights as a tool in its national development
strategy ever since the new patent law was introduced in 1985. A consequence of this is that its State
Intellectual Property Office today is one of the most important patent offices in the world.
TRIPS and access to medicines in third world countries
One of the objectives of the Doha Development Agenda is to reach an agreement to facilitate for
developing countries without domestic production capacity to procure medicines to fight important
epidemics such as HIV/AIDS, malaria and tuberculosis. An agreement should allow for clear and
easily applicable rules, which will solve the present problems without endangering patent protection of
other medicines, or in other countries.
There are considerable differences between different developing countries concerning their capacity to
produce medicines. Many small and poor countries completely lack production facilities, whereas
large countries such as Brazil and India have large and successful local pharmaceutical industries,
concentrating on the production of patent-free medicines. These industries hope to gain access to new
markets through modified TRIPS provisions.
At the same time, lack of access to medicines in developing countries is not primarily due to
restrictions imposed by the TRIPS Agreement or by patent legislation in general. In fact, according to
the World Intellectual Property Organisation (WIPO), around 95 percent of all basic medicines on the
WHO list off essential medicines are already patent free. Furthermore, very few AIDS medicines have
patent protection in Africa. It is rather the lack of healthcare facilities in the countryside, and the overall lack of healthcare resources, which are the main problems in the fight against AIDS.
Patent protection for living organisms
In the review of TRIPS rule on protection of plants and patents on living organisms, several WTO
member states want to prohibit the patenting of plants and animals or parts thereof, as well as the
patenting of specific genetic sequences and biological processes used to create such sequences,
whereas other WTO members want to allow patent protection for these.
TRIPS article 27.3 b already allows member states to exclude plants, animal and biological procedures
other than micro-organisms from patenting. Article 27.2 grants exemption from patentability to protect
public order and the health of people, animals and plants.
TRIPS and the Convention on Bio-Diversity (CBD) are separate mutually compatible international
agreements. Many developing countries members of the CBD demand that patents based on biological
material or traditional knowledge should not be granted unless there is prior informed consent from
the country of origin. The International Union for the Protection of New Varieties of Plants (UPOV)
enables member states to authorise "farmer’s privilege" to save seeds for sowing a new crop. Ongoing discussions in these for a should be taken into account before changes, which affect these areas
are made in TRIPS agreement
12. Free trade for textiles and clothing is important for
developing countries
Tariffs on textile products are high in most countries compared to tariffs on other products.
The great divergence between different WTO member states in both bound and applied tariffs means
that international trade in this sector is seriously distorted.
A special agreement was reached in the Uruguay Round in 1994 to phase out the old Multi-Fibre
Arrangement (MFA), so that trade in textiles and clothing is gradually coming to be ruled by general
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WTO rules. These rules will be introduced in three stages over a 10-year period to be fully
implemented at the end of 2004 through tariff reductions, removal of non-tariff barriers and simplified
import procedures. Quantitative restrictions are also being phased out through gradually increased
quotas. The quantitative impact of these measures has so far been fairly limited, which means that
important liberalisation measures will have to be implemented from now until the end of 2004.
The Agreement on Textiles and Clothing (ATC) of 1994 also engages all WTO members to improve
market access through lower tariffs, removal of non-tariff barriers and simplified import procedures. In
this area, little progress has been notable so far. In some cases new trade barriers have actually been
introduced.
Trade in textile and clothing from a development perspective
Along with foodstuffs, textiles and clothing are the most promising export sectors for most
developing countries. These sectors are also the ones that are most heavily protected, both in
developed and in developing countries. Freer trade for textiles and clothing would therefore
be very beneficial for the development of many poor countries, at the same time as it would
give consumers all over the world access to cheaper clothes. At the same time developing
countries should eliminate their own barriers in this area, which in many cases still are
surprisingly high. One issue which highlights the problems of both agricultural and textile
protectionism are the US subsidies to cotton growers, which hurt African and other thirdworld producers, and also make it more difficult to establish downstream textile industries in
cotton-producing countries.
Our priorities in the WTO negotiations on textiles and clothing:
•
The commitments of the Uruguay Round to reduce tariffs, to remove non-tariff barriers
and to simplify import procedures must be implemented by all WTO member states.
•
Negotiations on further tariff reductions should start from applied rates, so that new
bound rates will equal new applied rates. A maximum bound/applied rate of 15 percent
should be established for all textile and clothing products to eliminate peak tariffs.
13. More open and transparent public procurement will
help economic growth
Open international public procurement will enhance competition and give taxpayers in all countries
more value for money. Within the WTO, public procurement is regulated by a special plurilateral
agreement, the Government Procurement Agreement (GPA).
Public procurement in developing countries
The issue of increased transparency in public procurement is one of the four “Singapore” issues where
a decision about WTO negotiations will have to be taken at the WTO ministerial meeting in
September 2003. Many developing countries are hesitant to enter into negotiations in this area.
At the same time, public procurement in non-OECD countries amount to roughly 800 billion US
dollars per year, whereas the combined development aid of OECD countries amounts to around 50
billion dollars. In other words, savings of 10 percent in public procurement through lower prices,
higher quality and less corruption, would create a greater increase in available resources in developing
countries than a doubling of official development aid.
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Our objectives
In our view, the GPA should extend its application to additional sectors and more countries
should be encouraged to join. The agreement should also be simplified and commitments shown
more explicitly. Excluded sectors should gradually be included in the agreement with the ultimate
objective of achieving a uniform multilateral regulatory framework based on the principles of national
treatment and most favoured nation.
In addition to an improved GPA, we favour the introduction of an agreementon transparency in
public procurement, parallel to the GPA. The two agreements should be kept separate in order to
avoid any dilution of the provisions in the present GPA agreement. A special reference to these
agreement should also be made in the GATS agreement.
14. Clear rules are needed on dumping and government
subsidies
Market economic rules and well-functioning competition are important prerequisites for WTO rules to
help strengthening economic development. However, the most WTO member states have no or
insufficient competition legislation. For this reason the WTO has special rules, which permit action
against exports, which are deemed to be dumped or subsidised. By dumping one generally means
exports, which are sold more cheaply in export markets than in the producer’s home market.
Since WTO rules on dumping are fairly general, national legislation in these areas varies considerably
between WTO member states. Within the EU, anti-dumping action is a competence of the European
Commission. Since individual countries have considerable latitude for divergent implementation of the
WTO agreements in this area, anti-dumping action has in some cases been used for clearly
protectionist purposes to stop low-priced imports from more competitive producers, or to help ailing
domestic industries against foreign competition in general. Over the last ten years, many developing
countries have also started to use the anti-dumping instrument to stop undesired imports.
It is therefore important to develop more precise and stringent rules within the WTO concerning the
conditions for anti-dumping action, and on how anti-dumping investigations should be conducted, in
order to stem the frivolous use of this instrument for protectionist purposes. At the same time, all
WTO member states should introduce national competition legislation to obviate the need for antidumping action by their trading partners.
In order to achieve this the following action should be taken:
•
Countries, which apply the WTO anti-dumping agreement, should transpose it into
national legislation according to a common standard to be worked out.
•
Methods for calculating margins of anti-dumping and of injury should be harmonised.
•
The time schedules for processing anti-dumping cases should be harmonised along U.S.
practices (normally within 10 months, and always within 12 months). Injury should be
established before any provisional decisions on dumping are taken.
•
In establishing the anti-dumping duty, the WTO should prescribe application of the
“lesser duty rule”, i.e. a duty sufficient to remove injury, even if this duty is lower than
the dumping margin.
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•
WTO rules should establish that the import share from a specific country has to be at
least 3 percent of total imports in order to be included in a cumulative analysis. At
present, WTO rules merely state that imports should not be “negligible”.
•
There should be a statutory obligation for all WTO member states to test if
user/consumer interests have been properly taken into account before an anti-dumping
duty is imposed.
•
WTO rules should prescribe that limited domestic supply should cause the suspension of
anti-dumping duties.
•
The WTO should introduce more stringent conditions for anti-dumping duties to be
allowed to last more than five years.
•
The WTO should adopt rules excluding “captive” production from companies within the
same group, when establishing if a dumping situation exists.
•
A harmonised questionnaire of limited size should be established for collecting relevant
information from companies involved in a dumping investigation, to avoid that
investigated companies are harassed by demands for excessive and/or irrelevant
information.
•
Investigators should be obliged to take into account all available information in cases
where companies, despite co-operative efforts, have not been able to collect all the
required information due to excessively short time limits.
15. Promote common international principles for
competition
One of the main policy objectives of the Confederation of Swedish Enterprise is to promote efficient
cross-border competition on equal terms. This will provide an important impetus to trade and
investment and increased economic growth. The need for common multilateral principles for
competition policies increases as with ever-greater flows of trade and investment between WTO
member states. Until now, most problems created by distorted competitive practices have been dealt
with through the GATT agreements on dumping and government subsidies. However, these
agreements have several shortcomings, and can lend themselves to abusive implementation, while at
the same time they only cover a limited number of anticompetitive practices.
International competition control from the viewpoint of developing countries.
Developing countries are generally in a weak bargaining position in international markets and depend
on a free competition in order to secure imports at advantageous prices. To really profit from this, it is
important that developing countries also actively promote competition in their domestic markets, that
they fight corruption and inefficient public procurement and that they do not give excessive protection
to local manufacturers at the expense of cheaper imports. A well-functioning domestic competition
will also make countries less vulnerable to accusations of dumping in international markets.
To encourage competition on a level playing field within the WTO, a multilateral agreement on trade
and competition should fulfil the following criteria:
1. A multilateral agreement on objectives for competition rules should be directed to what is
necessary to prevent market access restrictions by anti-competitive practices.
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2. Competition rules, and their enforcement, should be based on core principles of efficiency,
transparency and non-discrimination.
3. A multilateral agreement should reduce administrative burdens and enhance legal certainty
on a global scale so as not to disturb the markets and slow down trade.
4. A multilateral agreement should provide solutions in cases of competing claims for
jurisdiction, claims of extraterritoriality and multiple parallel proceedings.
5. A multilateral agreement should clearly address anti-competitive practices by governments as
well as companies.
6. No country should be obliged to exchange company-confidential information.
If such information is transmitted, this should be on condition that it will not be used for other
purposes by the receiving authorities.
7. A binding WTO dispute settlement procedure should only review national regulatory
compliance with a future WTO agreement on trade and competition. It should not review
individual competition cases.
16. Summary – Important objectives for the new WTO
round
We expect the following main results from the new WTO round:
•
Long-term overall objective: Zero duty for all manufactured goods in 2010
•
A general reduction of tariffs for manufactured goods in all countries to a maximum of
10 percent, with sectoral zero-duty agreements in several new areas, tariff peaks no
higher than 15 percent and an elimination of all “nuisance tariffs” of less than 3 percent.
•
Liberalisation of trade in services in more new sectors and more countries and simplified
regulations for foreign service providers.
•
Freer trade in agricultural products and the elimination of export subsidies and other
trade-distorting measures.
•
Simplified customs procedures and increased support for international co-operation in
standardisation and in simplification of product certification.
•
Multilateral rules for investment protection guaranteeing equal treatment, nondiscrimination and protection against expropriation.
•
Increased opening up of public procurement to foreign providers of goods and
services, with more countries and more new areas covered.
•
Harmonisation and clarification of WTO anti-dumping legislation, to avoid
hidden protectionism
•
Technical assistance to developing countries to participate in trade negotiations
to improve their customs procedures.