Bridges Weekly Trade News Digest • Volume 9 • Number 2 • 26th January 2005

Indigenous Communities’ Rights To Potato Strains Recognised

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EU ADVISES TANZANIA TO RESOLVE OVERLAPPING CUSTOMS UNION MEMBERSHIP

During his visit to Tanzania on 20 January 2004, senior European Union trade official Karl Falkenberg advised Tanzania, currently a member of both the Southern Africa Development Community (SADC) and the East African Customs Union (EACU), to stick to just one customs union in order to maximise potential economic gains from the ongoing Economic Partnership Agreement (EPA) negotiations between the EU and the African, Caribbean and Pacific Countries (ACP). Mr. Falkenberg’s concern arose from the fact that although Tanzania was negotiating the EPAs as part the SADC custom union, it was also a member of the EACU (For more on the SADC EPA process see Bridges Weekly, 14 July 2004)

In the context of the EPAs, overlapping regional configurations, especially among Southern African groupings, have been a source of concern for some trade observers. They contend that these overlapping commitments have the potential come into conflict with each other, impose greater transaction costs on business and governments, and give rise to coordination problems. More significantly, trade experts have pointed out that while overlapping free trade areas are technically possible, overlapping customs unions are not, by their very definition — a customs union is formed when two or more countries agree to remove all barriers to free trade with each other, while establishing a common external tariff against other nations. Addressing SADC journalists during a December seminar in Brussels on the EU-SADC EPAs, EC Commissioner for Trade, Peter Mandelson, is reported to have said that the overlapping membership of SADC countries could give rise to "a huge confusion."

Overlapping trade commitments have recently come under great scrutiny: last week, a high-profile report on WTO reform identified the ’spaghetti bowl’ of overlapping commitments resulting from bilateral and regional trade agreements as the single greatest threat to the multilateral trading system.

ICTSD reporting; Tanzania advised to choose either SADC or EA Customs Union, IPP Media, 21 January 2005; "SADC Configuration a Nightmare," AllAfrica.com, 14 December 2004.

A groundbreaking agreement in Peru has recognised the rights of indigenous communities over potato strains that they had developed. The pact signed by six Peruvian indigenous communities with the International Potato Center (IPC), a Lima-based agricultural research centre and gene bank, would prevent companies from patenting the potato strains as well as the related traditional knowledge.

Under the agreement — the first of its kind — the gene bank returns the genetic resources and knowledge associated with the potato strains to the six communities, which have established a ‘potato park’ in a conservation area to grow and manage the plants. It also specifies that they should not become "subject to intellectual property rights in any form". Alejandro Argumedo from the Association for Nature and Sustainable Development (ANDES), which helped broker the deal, described it as "a first legal sign of the restoration of rights that indigenous people once had." He stressed that the communities were not interested in patenting the potato strains, since patents "represent a model of property that does not fit into their worldview" which is based on the open exchange and sharing of information.

The London-based International Institute for Environment and Development (IIED) hailed the agreement for allowing the indigenous communities to "unlock the potato gene bank and repatriate biological diversity to farming communities and the natural environment for local and global benefit," and suggested that it might inform similar processes elsewhere.

The text of the agreement is available at http://www.grain.org/bio-ipr/?id=429

"Potato Capital of the world offers up new recipe," IPS, 18 January 2005; "New Potato Deal in Peru Signposts Global Drive to Open Up Food Genebanks to Indigenous Peoples," INTERNATIONAL INSTITUTE FOR ENVIRONMENT AND DEVELOPMENT, 18 January 2005; " Indians in Peru regain potato rights," NEW SCIENTIST, 22 January 2005.

EC SUGAR REFORM: EC PROPOSES TRADE, DEVELOPMENT MEASURES FOR ACP ADJUSTMENT

On 24 January, the European Commission (EC) presented its "action plan" for mitigating the potential impacts of the European Union (EU) sugar reform to ministers of the African Caribbean and Pacific (ACP) sugar exporting countries in a meeting held in Brussels. The EC’s action plan consists of a set of trade and development measures aimed at assisting ACP countries through their adjustment process when the EU sugar reform enters into force (see BRIDGES Weekly, 1 December 2004).

EC Commissioner for Development and Humanitarian Aid, Louis Michel stated that the plan would be implemented "on the basis of the actual needs of the countries concerned." The EC also revealed that the trade dimension of the mitigation efforts would be addressed in the Economic Partnership Agreements (EPAs) currently being negotiated between the EU and the ACP countries. The development measures, on the other hand, would consist of development assistance targeted at enhancing the competitiveness of the sugar sector in ACP countries where this is sustainable, promoting diversification of the sugar industry in countries dependent on it, and addressing broader adjustment needs.

The EC emphasised that while the ACP countries would be responsible for designing and implementing country specific strategies so as to ensure that adjustment schemes are both relevant and efficient, the Commission’s role would be to define the principles of its collaboration, propose a broad range of assistance options and deliver efficient support. The EC also reassured the ACP countries that it had already budgeted for supporting such initiatives, with preparatory support to be granted from 2006.

ICTSD Reporting: "The Commission outlines its support to ACP Sugar Protocol countries," EU Press release, 24 January 2005.

UNCTAD SEMINAR RE-EXAMINES TRADE, POVERTY LINK IN LDCS

Presenters and participants at a 20 January seminar on UNCTAD’s 2004 Least Developed Countries (LDC) Report entitled "Linking International Trade with Poverty Reduction," said that the current narrow global and national focus on free trade and poverty is insufficient to analyse the long-term growth that is necessary for sustained poverty reduction.

Trying to create a broader understanding of the relationship between trade and development in LDCs, presenters observed that though there is a positive association between export growth and output growth in LDCs, this relationship is weaker than in other developing countries and may not lead to poverty reduction. The relationship depends on many factors including the composition of exports, import vulnerability, civil conflict, the sequencing and speed of trade liberalisation, the trade-aid relationship and the investment-growth link.

The report states that in LDCs, if exports are falling, the incidence of poverty is almost certainly increasing — but if exports increase, the incidence of poverty does not necessarily decrease. For example, massive export growth in Lesotho has actually been accompanied by a decrease in private consumption. While the IMF says that LDCs are on average more open to trade than high-income OECD countries such as the US or EU, export-oriented sectors in such countries are often not connected to the rest of the economy and the poor. The meeting concluded that the nature of integration into the world economy, and not just liberalisation per se, needs to be on the agenda to ensure that trade is made an engine of poverty reduction in LDCs.

ICTSD reporting.

UNCTAD: NAMA TALKS COULD BENEFIT DEVELOPING COUNTRIES, BUT UNEVENLY

A new study on industrial tariff reductions has concluded that both developed and developing countries stand to gain from an ambitious agreement in the non-agricultural market access negotiations at the WTO. However, the benefits to developing countries are likely to accrue to only a handful of them. "Coping with Trade Reforms: Implications of the WTO Industrial Tariff Negotiations for Developing Countries," released last week by the United Nations Conference on Trade and Development (UNCTAD), looks at 10 different scenarios based on degree and scope of tariff reductions.

According to the study, the greatest export gains would come from the elimination of all tariffs on industrial goods. Under this scenario, overall export revenues could increase by 8.1 percent. The second best option would see a "Swiss formula" for reducing tariffs (the higher the tariff, the greater the reduction), eliminating all tariffs under two percent, and agreeing to eliminate tariffs in sectors such as textiles and clothing, electronic goods, among others. The study projects that this could lead to a 4.3 percent increase in global export revenues.

The study underlined the fact that most of the benefits from tariff cuts would be distributed among a small group of countries, especially China, India, and other countries in Southeast Asia. The gains projected for Zambia, on the other hand, were minimal. It warned that many developing countries could face important structural adjustment costs, such as loss of tariff revenue, employment losses and reductions in real wages.

In terms of the negotiation process, the report pointed out that current talks face several challenges and that the large number of variables to be negotiated make it difficult to identify what countries will be required to do — and consequently, what benefits they will receive.

A draft version of the report is available online at: http://192.91.247.38/tab/namameeting/NAMAstudy.pdf

ICTSD Reporting; "Study Cites Benefits to Both Developed, Developing Countries from Tariff Cuts", WTO Reporter, January 21, 2005; "Press Release: Coping With WTO Trade Reforms: Mixed Impact for Developing Countries", UNCTAD, January 18, 2001.