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Media Centre  |  COSATU Press Statements

South Africa must stand firm at WTO talks

21-11-08

The Congress of South African Trade Unions is seriously concerned at the frantic attempts by Pascal Lamy, Director General of the World Trade Organisation (WTO), to revive the Doha Talks, which collapsed in July 2008, and finalise them before the end of th e year.

He has convened a mini-ministerial meeting for 10 December 2008 and there is a danger that he may use this meeting to force through the same sort of proposals which were previously rejected by most developing countries.

The meeting will take place against the background of the global financial crisis, which has given the matter added importance, given the protectionist measures being considered by the developed countries to cushion their industries from the impact of a re cession. Although the G20 meeting in Washington on 15-16 November 2008, came out against protectionism, it was ambivalent, saying:

"We underscore the critical importance of rejecting protectionism and not turning inward in times of financial uncertainty. In this regard, within the next 12 months, we will refrain from raising new barriers to investment or to trade in goods and services , imposing new export restrictions, or implementing WTO- inconsistent measures to stimulate exports. Further, we shall strive to reach agreement this year on modalities that leads to a successful conclusion to the WTO`s Doha Development Agenda with an ambi tious and balanced outcome."

There is nothing in this statement to suggest that the rich countries are looking at any improvement to the July package, and while they call for no new protectionist measures they are silent on removing the existing tariffs and subsidies which discriminat e against developing countries.

It is crucial therefore that developing countries are united in the WTO negotiations, COSATU is engaging the South African government at NEDLAC to urge them to revive the unity of the NAMA11 developing countries, particularly to get Brazil back into the fo ld, after it broke ranks at the July mini-ministerial and supported the proposed Non-Agricultural Market Access (NAMA) package.

The danger now is that these countries will be confronted with a bigger effort to bully them into accepting the package, with threats to blame them for being spoilers should the talks fail.

It is vital therefore that South Africa`s Minister of Trade and Industry, who has consistently opposed the package, must be supported in taking a firm stand against any attempt to blackmail developing countries and to uphold the policies agreed by parliame nt and the ANC/COSATU/SACP Alliance Economic Summit on 16-17 October 2008, whose declaration created a sound basis for a joint alliance and government stance, saying:

"The `package` presented at the July WTO Ministerial does not meet the developmental mandate agreed in Doha in 2001. South Africa cannot accept an outcome imposing large cuts in applied industrial tariffs that will threaten jobs in vulnerable industries an d curtail industrial development policy space. If the final package does not provide substantially greater flexibilities and higher trade coefficients so that our sensitive sectors can be properly shielded and policy space for future industrialisation be a dequately retained, we should not sign the package.

"SADC integration should be based on a developmental model that includes infrastructure development, cooperation in the real economy including the development of regional supply-chains instead of the current narrow `free-trade` model.

"The Summit urges government to urgently address the situation of vulnerable sectors to ensure that the immediate threats of job losses and trade destabilisation are addressed.

"The success of industrial policy will require strong coordination by different government departments and agencies. National Treasury should work in partnership with the DTI including in making funding available for industrial sector plans and programmes. "

The global economic meltdown has confirmed the correctness of COSATU`s view, as expressed by Ebrahim Patel, General Secretary of SACTWU and a COSATU delegate to the WTO talks in July 2008, when he said that the proposed trade package could seriously damage South Africa`s capacity to grow its industrial sectors.

"South Africa is offered very little on agriculture but we are asked to sacrifice our manufacturing sector. The proposals we are expected to consider will result in a massive tariff reduction on most industrial products, from automobiles to clothing and pl astic goods. Tariffs are expected to go down from a bound rate of 45% in some instances to about 16% and this will result in thousands of job losses and the closure of many factories over the decade ahead.

"In the previous round of trade talks, South Africa was classified as a developed country and was asked to make big cuts to industrial protection. This has cost us hundreds of thousands of jobs and has sharpened the problems of poverty and unemployment.

"We are still paying the price as a country through this historic injustice. Our electronics sector has been decimated, clothing and textiles has lost 150 000 jobs and imports are pouring in on a range of manufactured products, from sweets to furniture. We cannot afford another damaging round of tariff cuts with the further painful costs to employment and social stability," he said.

"Developed countries have now placed further proposals on the table that will hurt our interests, such as a provision that any flexibility that is granted must only apply to a portion of any product category. This is known as the anti-concentration clause and it will mean we cannot exempt the auto or clothing & textile sector from the most damaging tariff cuts.

"What is at stake is the very future of manufacturing on the African continent. If passed in their current form, we will lose our industrial base and become simply a supplier of raw materials to the factories of Asia and Europe and a destination for touris m.

"Our domestic debates on policy choices will be rendered irrelevant if we are trapped in commitments that are poorly designed and damaging to the interest of our country. With the highest unemployment rate in the world of any medium sized country, we have no space to make concessions that will destroy jobs," he said.

COSATU calls on the South African government to push strongly the case for the developing world on 10 December and any further talks. The labour movement will fully back government in pursuing an outcome that will protect jobs and enable SA to implement an interventionist industrial strategy to grow the economy and absorb millions of unemployed South Africans.

If we fail, and the present package is accepted, it will be a catastrophe for South African jobs and the economy, made even worse by the economic recession which is already causing a wave of retrenchments.

Patrick Craven (National Spokesperson)

Congress of South African Trade Unions

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