Venezuela Threatens to Forestall WTO Agreement

Venezuela objects to agricultural subsidies, in the WTO meeting in Hong Kong and joins with 10 other countries to demand that the global north increases market access.

Caracas, Venezuela, December 16, 2005—Venezuelan officials say the WTO discussions taking place in Hong Kong are failing, and was among the countries threatening to forestall the agreement, citing concerns about unfair advantages in agriculture for the global north and the risk that the agreement could lead to industrial sabotage in southern countries.

“Developed countries invade the world with their subsidized products and, as if it were nothing, hermetically seal their boarders to the products of the global south,” said Venezuelan Foreign Affairs Minister Alí Rodríguez Araque.

Venezuela, along with 10 other countries, including Argentina, Brazil and India, formed a group which set forth conditions which needed to be met before they went ahead with negotiations on non-agriculture market access (NAMA).

The group’s statement said, “The ambition in NAMA cannot be viewed in isolation. It has to be proportional and commensurate with the contributions by developed countries in other market access areas. Developing countries cannot be expected to pay for the much-needed reforms in the agriculture sectors of developed countries.”

“Of course we are not going to sign the agreement the way it is now,” said Rodríguez. In order for an agreement to take effect, it must be unanimously supported by all countries in the WTO.

Peter Mandelson, Europe’s trade negotiator, said that there is no clear basis for negotiation. “Between the lines, the emerging direction of the meeting is worrying. The level of ambition, if anything, is going backwards. It is hard to see where progress can be achieved if the talks continue in their present direction,” he said.

US and European officials had pointed to their offers of tariff and quota free access to their markets for the 32 “least developed nations” as a key step to helping developing nations. 

Roger Figueroa, Venezuela’s Vice Minister for International Trade, said concessions by the US and Europe to the global south are insufficient and self-serving. “The US and Europe realize that the round is being held back, and are offering additional aid to the least developed countries. The goal isn’t so much to give them this scrap of aid, but rather to try to ensure the Ministerial Declaration doesn’t tell the entire truth about what’s happening here,” he told Panorama.

“If agreements aren’t made in agriculture, obviously, no part of the agreement will move forward,” Figueroa told Panorama.

But European countries expressed frustration at the agricultural focus, saying that the conference needed to also focus on industrial trade. "This is not an agricultural round, it is a world trade conference,” German Economics Minister Michael Glos said.

Other WTO sub-groups also voiced objections about the direction of the trade talks. A statement of 27 members of the G20 and the Cairns group, countries with major agricultural exports said, “The dynamics of the negotiation require movements by both the EU and the USA. It is time for them to display leadership.” The statement also called on “the major agricultural subsidizers and protectionists to return to the core issues of this Round.”

But some economists dispute the importance of reduction of agricultural trade barriers to development. A release from the Washington-based Center for Economic and Policy Research (CEPR) says that according to World Bank research, developing nations stand to gain well under 1 percent of their GDP from complete trade liberalization, and, according to Bank research, expected worldwide gains from the Doha round are between 0.04 or 0.28 percent of GDP. “Furthermore, the elimination of rich country subsidies, while benefiting some big agro-exporting countries and cotton farmers in Africa, would be a net loss for developing countries as a whole,” said CEPR co-director Mark Weisbrot in a press release.  

Conversely, CEPR notes, “Intellectual property protection under the WTO creates very large economic distortions that are extremely costly for developing countries.” Venezuela had brought objections to intellectual property protections in previous meetings, saying in one communiqué, “It is important to begin a full review and possible renegotiation of the TRIPS [Trade Related Practices on Intellectual Property Rights] Agreement from the development standpoint.”In addition to traditional economic risks from trade liberalization, there were risks of economic sabotage, said Rodríguez. He pointed to the 2002-2003 oil industry shutdown, and said that because PdVSA was working in a joint venture with a United States company, “We faced continuous sabotage, which delayed the industry recovery process.”

The oil industry shutdown led to a 9 percent reduction in GDP in 2003, and a 7 percentage point increase in unemployment. The Venezuelan economy has since recovered.

"Solidarity and assertiveness amongst developing countries is vital to achieve a pro-development outcome and resist rich country attempts to stitch up a deal that serves only their interests," Phil Bloomer of Oxfam International told IPS.