COSATU+memorandum+on+WTO+handed+to+US+Embassy



==//The following memorandum was handed to His Excellency, Mr Donald Teitelbaum, Chargé d’Affaires, United States of America, on 10 May 2006, by COSATU Gauteng Provincial Secretary, Siphiwe Mgcina, at a picket of the embassy by COSATU members as part of the Jobs and Poverty Campaign.//==

Dear Mr Donald Teitelbaum

COSATU writes to bring to your attention the disaster awaiting our country, South Africa, and the rest of the countries in the South or the developing nations. As you are aware the World Trade Organisation is negotiating a detailed agreement based on the very unfavourable and anti development framework negotiated in the Hong Kong WTO Ministerial Conference in December 2005.

You will recall that the Doha round of WTO talks started with a solid promise that this would be a “development round”. Over the last year, we have become absolutely convinced that a number of governments, particularly from the European Union together with the United States, are paying lip service to this commitment. Instead, a terrible trade-off is being offered to developing countries: increased access to the markets of developed countries for agricultural products in return for significant market liberalisation particularly in industrial products.

What this means for a country like South Africa is that we will be seriously de-industrialised, lose a significant part of our manufacturing sector, and become simply a producer of primary products and a destination for tourism. The proposed tariff cuts will cut very heavily into our labour intensive sectors. For example, using the tariff cutting formula proposed by the developed countries (the so called Swiss formula) with a coefficient of 30 (the variable they propose that influences how steep the tariff cuts will be):


 * Tariffs in passenger vehicles would be cut from the current applied rate of 34% to a rate of 18.8%. This represents a real decrease of a massive 45.5%
 * Tariffs in clothing would be cut from the current applied rate of 40% to a rate of 18%. This represents a real decrease of a massive 55%.
 * Tariffs in televisions would be cut from the current applied rate of 25% to a rate of 15%. This represents a real decrease of a massive 40%.
 * Tariffs in furniture would be cut from the current applied rate of 20% to a rate of 12%. This represents a real decrease of a massive 40%.
 * Tariffs in final plastic products would be cut from the current applied rate of 20% - 25% to a rate of 12% - 13.6%. This represents a real decrease of a massive 40% to 46%.
 * Tariffs in auto components e.g. brake pads and lining would be cut from the current applied rate of 30% to a rate of 15%. This represents a real decrease of a massive 50%.

Developed countries have argued that developing countries should not be concerned about the tariff cuts as they will be allowed some flexibility though excluding 5% of their tariff lines from tariff reduction or allowing 10% of tariff lines to take a smaller reduction than proposed by the formula. The reality is that these flexibilities will not sufficiently protect workers and light industry in South Africa and many other developing countries.

To take a South African example, we will see a substantial decrease in 255 tariff lines affecting clothing. If we calculate how many of these we could protect through the provisions for exclusions, we find that they are already 4.63% of all tariff lines. If you include the wider range clothing, textiles footwear and leather, 15.3% of tariff lines are affected. This means that clothing, textiles, footwear and leather alone would not be protected by a 5% exclusion. There would be no space to even think of including automotive and components, plastics, furniture, downstream metals and the range of other labour intensive sectors.

Using the formula to reduce our tariffs will also not allow South Africa to industrialise in the future as we will not be allowed to raise tariffs to a sufficient level to protect developing sectors or labour intensive sectors. This will condemn us to being providers of raw materials for exports.

Evidence has shown that increased liberalisation poses a threat to industrialisation. For example, according to Mehdi Shaffaeddin, an UNCTAD study on 50 developing countries showed that half the countries that liberalised imports experienced de-industrialisation. Only 10 of the 50 countries expanded their manufacturing value added.

To make matters worse, developed countries are reported to be shifting back the goal posts in the NAMA negotiations and placing intense pressure on developing countries to liberalise. At the same time, they have frustrated developing countries by refusing to move substantially on the agricultural negotiations. Any outcome under these conditions can only favour developed countries and be a severe blow to development for developing countries.

Thus, this matter is so serious that unless action is taken at the highest level, we face the likelihood of a WTO agreement that will spell the end of any prospect that South Africa can seriously combat poverty and unemployment. We will truly be condemned as basket cases that require charity for many decades in future.

We therefore, appreciate public statements made by many in support of development. We however feel that more drastic action not just words is needed to stop the catastrophe waiting workers in Africa and in other developing nations. It is in this context that we urge your government through this memorandum to retract the stance it has taken in the WTO negotiations in support of the fight against mass unemployment, gross inequality and terrible levels of poverty in developing countries.

Yours sincerely



__General Secretary__
 * Zwelinzima Vavi**


 * Patrick Craven (Editor, Shopsteward Journal)**
 * Congress of South African Trade Unions**
 * 1-5 Leyds Cnr Biccard Streets**
 * Braamfontein, 2017**


 * P.O.Box 1019**
 * Johannesburg, 2000**
 * South Africa**


 * Tel: +27 11 339-4911/24**
 * Fax: +27 11 339-5080/6940**
 * E-Mail: patrick@cosatu.org.za**

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