UNDP, together with the Rockefeller and other foundations, published the book 'Making Global Trade Work for People' (Earthscan, 2003). It is based on the premise that the relevance of the global trading regime for human development and the achievement of the MDGs has gradually increased in the past few years. This is partly because the global trading system under the World Trade Organisation (WTO) has expanded its embrace of issues and policies that were not part of the General Agreement on Tariffs and Trade (GATT). The package of agreements under the current trade regime commits members not only to trade liberalisation in goods, but also in the areas of services, investment and intellectual property rights. These policy choices affect human development because they have an impact on food security, income, employment, public health and education, gender equality, capital flows, labour migration, and ownership of and access to technology.
As the global trade regime under the WTO is closely linked to human development, the multilateral trade regime must be evaluated in terms of its scope for achieving the MDGs. For this to happen, global trade rules will need to shift their primary concern from the promotion of liberalisation and market access to enabling or at least not constraining already existing policy space for human development. While recognising that trade liberalisation and market access can make an important contribution to human development in specific situations and for specific sectors, the global trading system must enable the creation of domestic policy space and flexibility for fostering MDG progress within member states.
Different perceptions and expectations exist among WTO members vis-а-vis global trade negotiations. For some, the Doha round ought simply to be a continuation of the Uruguay round, aimed at the extension of multilateral trade discipline into new hitherto domestic policy areas. For others, multilateral trade negotiations should be of a corrective nature, ensuring that the system becomes more supportive of human development efforts and the MDGs.
Some of the important agreements in the Doha round that embody its 'development' content include
- agricultural subsidies;
- intellectual property rights and public health;
- liberalising trade in certain service sectors;
- special and differential treatment; and
- capacity strengthening for trade.
The Doha agenda is much broader than these five issues and progress in them can only be viewed as steps towards making the global trade regime more 'development friendly'. However, even if judged against this limited set of issues, progress has been very modest. Deadlines for agreements on agriculture, TRIPS and S&D have come and gone without tangible results. Little progress has been made in integrating trade strategies with broader national development or poverty reduction strategies, including the Poverty Reduction Strategy Papers (PRSPs). As a result, without several major breakthroughs in the very near future, the Doha 'development' agenda is likely to be dismissed as empty rhetoric.
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Agriculture
Agriculture remains the mainstay of the majority of the world's poor people. The majority of the people in developing countries rely on agriculture for employment and livelihood. Thus, the WTO Agreement on Agriculture has major implications for the MDGs.
Two proposals are particularly important with respect to MDG 8: (i) the need to allow developing countries greater flexibility in their agricultural development policy to enable them to achieve food security and foster human development; and (ii) the need for increased market access, especially to the EU, Japan and North America, through reductions in subsidies, cuts in tariff and non-tariff protection, and the cessation of export dumping practices. The Doha agreement mandates the reduction, "with a view to phasing out" export subsidies. This offers the possibility of agreeing on a concrete target for the phasing out of such subsidies well before 2015, and ideally by the end of the Doha Round, as part of a global partnership around MDG 8. A 2015 target for phasing out other domestic subsidies which are production related and harm developing countries should also be agreed as part of MDG 8. Nevertheless, the current trend in this respect is disheartening since OECD countries continue to grant generous subsidies to their agricultural sector - to the tune of over $300bn per year, or approximately 6 times their combined ODA contributions.
Comprehensive proposals embodied in the 'development box' - a set of proposals which emphasize that global trade rules need to provide more policy space to developing countries to pursue food security and broader pro-poor agricultural development policies, including a special safeguard mechanism for developing countries, are important because of their direct relevance to human development. Discussions on these issues are at a crucial stage in global trade negotiations on agriculture. Agreement on a 'development box' will communicate the message that the trading regime can put human development and the needs of the poor at its core, thus giving substance to the widely proclaimed aspiration towards a Doha 'development' round.
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Trade related aspects of intellectual property rights (TRIPS) and public health
The TRIPS agreement has far-reaching consequences for human development. In public health, TRIPS affects access to drugs and medical equipment through higher prices and disincentives for the production of generics through restrictions on reverse engineering. While expected to fuel research, there is no strong evidence that patent protection has led to more research on the diseases of the poor. Diseases that occur only in developing countries seldom attract much research and development. Out of 1,223 new chemical entities that were developed between 1975 and 1997, for example, only 13 treated tropical diseases. Of those, two were slight modifications of existing drugs, two were produced by the US military, and five were the result of veterinary research. Thus, private drug companies invented only four new drugs specifically for tropical diseases in the past two decades. It may also be relevant to recall that in the 1940s, when Merck Co. owned exclusive rights to the first antibiotic against tuberculosis, the head of the company released its hold on the patent. This decision made access to cheaper generic versions of this life-saving drug more affordable, especially for poor people. George W. Merck, the son of the company's founder, justified his decision thus, "medicine is for people not for profit".
The Doha Declaration reaffirms the right of developing countries to interpret the TRIPS agreement from a public health perspective and explicitly recognises the flexibility to grant compulsory licenses and the right of countries to determine the grounds on which these are granted. As such, it is an important milestone in the debate on trade and human development. However, even in terms of public health, it does not provide a solution for countries without a generic drug manufacturing capacity, which includes most of the poorest and least developed nations. The fact that no agreement was reached on this critical unresolved issue by the set deadline has serious negative implications for the Doha 'development' agenda. Real progress on this issue should be viewed as an important benchmark against which commitment to MDG 8 is judged.
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General Agreement on Trade in Services (GATS)
From a human development perspective, it is vital that countries preserve adequate policy space for sequencing the progressive liberalisation of basic public services such as water, health, education and social protection. The liberalisation of these basic services cannot be imposed as a blank prescription and the 'single undertaking,' dispute settlement and cross-retaliation frameworks of the current world trade regime are inappropriate for progressive liberalisation of such basic social services which are critical to the achievement of many of the core MDGs. As the GATS agreement already stipulates, liberalisation should take place with due respect for national policy objectives. Great caution and care need to be exercised in these vital areas since the private management of public utilities - for example, water supply - has raised concerns in many developing countries - particularly in Latin America - because of their impact on access for the poor.
Another area of the General Agreement on Trade in Services (GATS) deals with the movement of natural persons, which is also relevant to human development. The establishment of concrete measures and time frames for facilitating the temporary movement of natural persons would foster MDG progress. This would also help reduce the current asymmetry between the liberalisation of capital and labour.
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Special and differential treatment
The concept of 'single undertaking' means that countries are required to accept all aspects of an internationally agreed set of rules. More flexibility would be welcome for a country to opt out of particular sub-parts that are potentially or actually inconsistent with its human development objectives, while maintaining a 'fundamental core' of non-negotiable tenets and practices to which all countries would subscribe. Such flexibility would reflect better the varied needs of such a large and diverse membership which is at such different stages of development.
S&D treatment constitutes an effective mechanism for incorporating human development targets in the global trade regime. Its actual strengthening and implementation is a measurable benchmark for the achievement of MDG 8. But S&D provisions are still seen as the exception rather than the rule. Developing countries often see them as insensitive to the stage of their development. In their current formulation, the S&D provisions are rarely phrased in contractual language and thus difficult to operationalise. In most cases, S&D treatment is conditional on continuous renegotiation for transition periods and discretionary exceptions. As such, they are open to costly and time-consuming litigation.
The S&D principle relates directly to the 'development' dimension of the Doha agenda. Its scope should be widened to cover issues of education, preventive health and essential drugs, transfer of relevant technology, the right to the use of traditional knowledge, policies that ensure gender equality, and the poor's access to energy. Greater acceptance of the S&D principle as a generalised rule rather than an exception or a special case will foster the 'development friendliness' of the global trade regime.
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Strengthening capacities
A global trading system cannot deliver fair and effective outcomes unless its members have the capacity to negotiate in a meaningful way. But capacity for trade-related policy research and negotiations are limited in many developing countries. Strengthening the capacities - to set the agenda, to negotiate effectively and to keep pace with trade negotiations, especially for the least developed - is a crucial component of a multilateral trading regime oriented towards human development and the MDGs. The need for technical assistance in this field has been recognised in the Doha agreement. Tangible criteria and indicators that track progress need to be agreed upon and monitored regularly. Aid-for-trade will help the least developed countries take fuller advantage of the gradual liberalisation of global trade.
The Integrated Framework (IF) was established in response to the complexity of the LDCs' trade-related problems that constrain them from realising the potential development dividend of a multilateral trading regime. The IF was first mandated by the WTO Singapore Ministerial Conference (1996) as the principal mechanism for mainstreaming trade within national development plans of the LDCs. While trade is considered an engine for economic growth, the gains from open trade cannot be assured unless trade policy is appropriately factored into the national planning framework. The IF, as a joint initiative of six multilateral institutions (i.e. IMF, ITC, UNCTAD, UNDP, World Bank and the WTO) is structured as a multi-agency, multi-donor programme to assist LDCs' develop their human and institutional trade policy capacities. Mainstreaming trade needs to be rooted, not only at the policy level, but also in government institutions and in the government-donor partnership. If the IF is to realize its potential it will need to be much more focused on capacity deepening and strengthening and more closely integrated with national development strategies and poverty reduction strategy papers (PRSPs) in the LDCs.
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