[asia-apec 441] tax-free Internet

[Roberto Verzola]

The US has managed to push for a "non-binding" agreement for tax-free
Internet commerce. Though non-binding, it sets the tone for future
negotiations (obviously to turn it into a binding agreement).

This is again a reflection of the interests of the US and Europe as
emerging information economies. The developing countries were caught
unawares by this US move (submitted at the last moment of the WTO
negotiations, according to Martin Khor of TWN -- story attached
below), because they do not appreciate enough the fundamental changes
brought by ICT.

I hope the people's forum vs APEC in KL doesn't make the same mistake.

Obet Verzola
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SUNS #4218 Tuesday 26 May 1998
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Trade: South needs more influence in WTO's corridors

Geneva, May 21 (IPS/Lewis Machipisa) - Developing countries avoided
losing ground at the World Trade Organisation (WTO)'s Second
Ministerial Meeting here, but achieved little else -- highlighting the
need for them to be better prepared for future trade negotiations.

The outcome of the May 18-20 meeting could have been worse.

Some industrialised nations want talks to be launched within the WTO on
additional subjects such as investments and competition policy, whereas
most developing nations oppose this.

In the end, no new issues were adopted save a non-binding declaration
on duty-free treatment for goods and services traded electronically,
which was proposed by the United States.

The General Council of the WTO shall establish a comprehensive work
programme to examine all global electronic trade issues, the ministers
said in a final declaration on global electronic commerce.
"The meeting really didn't cause a disaster for us but it created a
role in which the rich countries can now put in their agenda and we
need to be able to strengthen ourselves," said Martin Khor of the
non-governmental Third World Network. It is now critical that
developing nations beef up their presence in Geneva so that "we can
gear up for negotiations. It's better to do it now otherwise it would
be more expensive later if we don't fight for our rights."

African diplomats said one of the disadvantages they faced in engaging
western negotiators was their limited numbers. This, they explained,
eroded their negotiating capacity in Geneva, especially since, on any
given day, there are three to four meetings going on at the WTO
building here.

"By and large, this meeting opens the way in the next 18 months for the
possibility that these rich countries are going to push for more for
themselves and we need to strengthen ourselves to be able to defend
against that," Khor told IPS. Despite the fact that very few countries
-- about 10 out of the WTO's 132 members -- had been involved in
discussions on electronic commerce, more time was devoted to this
subject than any other.

"When African ministers came to the second World Trade Ministerial
Meeting, they had a message with a very strong concern for greater
commitment to the issue of implementation," said Yao Graham of the
Africa Trade network, a grouping of NGOs, research institutions, and
media organisations. But from the final declaration at the end of the
WTO meeting, it is very clear that there is only a cursory
acknowledgement of that issue."

The fact that the next ministerial meeting, in 1999, will be held in
the United States, makes it even more likely that the issue will be
pushed aside as the US and Europe try to bring new issues to be agreed
for negotiations, Graham feels. "That the US managed to get its
proposal on Electronic Commerce to be considered by the meeting at the
last minute, is a graphic example of the power of the US in the
organisation," he argued.

Most African delegations and NGOs only got to know about the US deal at
the start of the ministerial conference. But by Wednesday, just about
everyone had been supporting it. "This sadly illustrates the problems
within the ranks of the developing countries," said Graham.

Khor commented that rather than rush and dwell on an issue that they
did not know about and did not need, the ministers should have focused
on all the changes that are going to take place in the next few years.

"At the end of the day the real focus of the meeting became the new
agenda of opening up even more," Khor told IPS. "So it's quite clear
that U.S. and Europe wants to add in more issues and that may even
cause more instability to the developing world, for example issues of
investment, government procurement, competition policy, trade and
environment."

Non-governmental organisations (NGO) deplored the way the U.S. managed
to force its declaration on Electronic Commerce on WTO members. In a
joint statement, 18 NGOs from around the world lambasted the process
saying it was "most untransparent, undemocratic and non-participatory".

"Electronic commerce is a complex issue," they added. "Asking for
tax-free status for things transmitted through electronic means has
many implications. The benefits will almost exclusively accrue to
corporations of developed countries whose aim is increased market
access through the move."
According to the NGOs, the US proposal was "something that fell from
the sky." Most NGOs from both the North and South only found out about
it on Monday, hours before it was put before the ministers.

This, commented the NGOs, makes a mockery of statements to the WTO
ministerial by US President Bill Clinton and WTO Director-General
Renato Ruggiero on increased transparency and participation in the WTO.

"Statements have been made here about greater transparency and opening
up to civil society, but from the declaration, you get the impression
of a one-way perception, of public relations rather than an interactive
process," said Graham.

He also lamented the fact that few African journalists covered the
meeting. "To me this is a statement of just how this important business
of the WTO is still bypassing Africa," he argued. "There were fewer
than five African journalists out of about 200."