Global Policy Forum

Gustavo Capdevila

An organisation of transnational corporate executives urged the United States, European Union and Japan to cede to some of the demands of developing countries -- particularly in regards to agriculture and drugs patents -- in order to jump-start the WTO trade liberalisation talks.

The International Business Council, a group of top executives from major corporations, outlined its concerns in a statement issued Friday, less than three weeks ahead the Fifth World Trade Organisation (WTO) Ministerial Conference, to be held Sep. 10-14 in the Mexican resort city of Cancun. There, the trade ministers of the WTO's 146 member countries will assess the state of international trade negotiations of the Doha Round, launched at the fourth ministerial conference in the Qatar capital in November 2001.

The Doha Round is bogged down in disagreements, in general terms pitting the developing South against the industrialised North, particularly when it comes to agricultural trade. The discrepancies are such that the chairman of the WTO General Council, Uruguayan negotiator Carlos Pérez del Castillo, could not make good on his pledge to distribute on Friday the first draft of the declaration that the trade ministers will discuss in Cancun. And for the same reason the opening of the sessions of the General Council itself -- slated for Aug. 25-26 -- will be postponed at least one day, said a source close to the negotiations. The Council is to discuss Pérez del Castillo's draft declaration.

In their statement, the IBC executives referred to these stumbling blocks in stating that "significant breakthroughs are required on key issues" if the goals of the Doha Development Agenda are to be met by the agreed deadline, the end of 2004. The agenda of the round of negotiations mandated by the ministerial meet in Qatar focuses on agricultural trade, services, poor countries' access to low-cost medicines, and other issues that are intended to benefit the developing South.

The question of access to medications is dealt with at the WTO in the realm of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). Poor countries facing public health crises related to HIV/AIDS, malaria and tuberculosis, among other diseases, want the right to produce or purchase low-cost or generic drugs for their populations. But the big pharmaceutical firms hold the patents to many of these essential medications. According to the IBC, the Cancun conference must produce "concrete results on TRIPS and health for the poorest countries" so that their access to necessary medications is enhanced.

But the business leaders also voiced the argument of the major pharmaceutical laboratories, saying that access should be achieved "while safeguarding incentives that lead to the development of new drugs for existing and emerging diseases." The IBC document, presented at an informal press conference Friday in Geneva, bears the signature of Henry A. McKinnell, chairman and chief executive officer of the U.S.-based Pfizer Inc., one of the world's top pharmaceutical firms.

The other signatories were Niall FitzGerald, co-chairman and CEO of the British-Dutch company Unilever, which produces food, cosmetics and household cleaning products; Peter Brabeck-Letmathe, vice-chairman and CEO of Nestle, the world's leading food company; and Josef Ackerman, chairman of Deutsche Bank, and head of the IBC.

The matter of access to medicine was on the verge of being resolved last December, when the chairman of the TRIPS council at the WTO, Mexican negotiator Eduardo Pérez Motta, achieved majority backing for a declaration that the developing countries found acceptable. But the U.S. trade delegation, under pressure from the pharmaceutical industry, blocked the agreement at the WTO, an institution that takes many of its decisions based on consensus.

Sources involved in the negotiations said Washington is working with drug companies to draw up a formula that would comply with the Doha mandate, aimed at facilitating poor countries' ability to handle health crises.

The intention of the United States, according to the sources, is to reach an accord and present it before the Cancun meeting begins, for fear that if the issue remains unresolved it will only fuel protests by the civil society groups that will also be gathering in the Mexican beach city.

The other key issue in the current WTO negotiations is agricultural trade. In their document the transnational executives took a more progressive stance than that of the farm trade superpowers: the United States and EU. The IBC says the ministers in Cancun need to establish "clear and ambitious frameworks for removing damaging trade barriers in agriculture and manufacturing."

For agriculture in particularly, they urge the "rapid phasing out of all trade distorting farm subsidies" in the industrialised world, including export subsidies. Estimates by intergovernmental organisations indicate that industrialised countries together spend more than 300 billion dollars on sustaining "inefficient" farm production annually. The business leaders state that the elimination of protectionist measures "should include export subsidies, which damage farming communities in developing countries." "We also call for substantial and progressive cuts in tariffs on agricultural produce. These should be at least 50 percent, with the highest tariffs being cut the most," says the IBC document.

The prescriptive element of the statement is the proposal to set aside the agenda items for the Cancun conference that have not yet produced consensus, listing four areas that are of greater interest to the industrialised North than to the developing South. These are: investment guidelines, competition policy, trade facilitation and government procurement. "These can be discussed most effectively post-Cancun."

The four are known as the "Singapore issues" because they have been in discussion since the second WTO ministerial conference, held in that city in 1996. Most developing countries are wary of the industrialised world's intentions in establishing modalities to negotiate the four items.

The transnational executives say progress on poor countries' access to low-cost medicine and on farm trade would give momentum to negotiations that could be opened after next month's ministerial meet in Cancun.

Success would stimulate "faster and sustained growth in developing countries, where four out of five of the world's citizens live," they assert in the text. With "visionary and generous leadership", especially from the United States, EU and Japan, these objectives can be attained.

The IBC, made up of more than 100 corporate executives from all industries, acts as an advisory body to the World Economic Forum, the organisation that meets annually in the Swiss alpine city of Davos, drawing business leaders, economists, heads of state, academics and civil society representative to discuss the state of the world economy and propose means towards social and economic development.

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