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    Invest in Business Advocacy for WTO Negotiations

     

     
     
    © International Trade Centre, International Trade Forum - Issue 2/2003 
     

    In more than half the world, business interests are not sufficiently integrated into national trade negotiating positions. This can lead to governments agreeing to trade rules under which, afterwards, their firms may not be able to do business. Instead, informed, timely and targeted business advocacy can help countries conclude beneficial agreements.

    After the end of the Uruguay Round, the business sector all over the world realized that the newly-created world trading system would have a decisive impact on business. All WTO members have to change their national laws to comply with the rules in the new trade agreements, and they are feeling the effects. Now, the Doha Development Agenda - which will change business conditions worldwide again - should be at the centre of business's concerns. In these negotiations, one might assume that all 146 WTO members are preparing national positions which incorporate diverging political, business and other interests. It is not exactly so.

    Preparations are lopsided 

    ITC's experience reveals that preparation for the negotiations is lopsided. In developed countries, it is a matter of course that government and business hold regular dialogues on trade matters, and negotiators work out national positions that take into account different business interests. What ITC has observed in most developing countries and transition economies is rather different. ITC's World Tr@de Net and "Business for Cancún" meetings, which bring together business and government representatives in the context of WTO negotiations, frequently start with such spontaneous outbursts as: "This is a historic day. For the first time in this country, business and government representatives are talking about the business community's interest in the multilateral trading system." It is timely to examine the implications of this unbalanced setting.

    While dialogue between business and government on trade matters is a must in all countries, it is still weak in the developing world, for many reasons. Although many developing countries have long-standing forms of business advocacy, it tends to cover economic policy issues such as labour or taxation. The business sector has generally dealt with multilateral trade negotiations poorly, due to factors such as:

    • difficulty in identifying the business implications of the complex multilateral trading system;

       
    • reluctance to invest in business advocacy related to trade policy because of the uncertain 'rate of return';

       
    • lack of mature, credible and well-informed business institutions; and

       
    • the absence of a 'business advocacy' culture.

      With the emergence of new democracies based on market economy principles and the globalization process, both business and governments want to change this unsatisfactory situation. Learning from post-Uruguay Round developments, business and government representatives in all countries are starting to agree that business advocacy is indispensable for WTO negotiations.

      Business input is vital 

      A Malawian participant of the Southern African Business for Cancún meeting said: "Young democracies and new market economies have to learn how to engage in business advocacy. For business to participate in working out national negotiating strategies, you need a well-informed business community."

      Participants in the Business for Cancún meetings claimed that: "Governments themselves do not know where the stakeholders stand and what is best for them, hence the failure to negotiate appropriately," or "Specific knowledge does not reside in government ministries but in business." Some pointed to the existing gulf between the government and the business community, and even a deliberate lack of transparency.

      They also stressed differences between government and business language and working cultures: "The language of administration is the language of obligations and time is measured in years, while the language of business is the language of solutions within weeks and months." Participants also confirmed that business advocacy at the regional and international level is non-existent or very rare in the developing world.

      For trade in goods and services 

      What became clear in the Business for Cancún meetings is that business's involvement in negotiations - right from the beginning - is indispensable. There are obvious reasons, such as that exporters are in the best position to identify barriers to entry in foreign markets. By not taking the extra time and energy to consult business - when formulating requests to foreign governments to reduce these barriers, or when preparing offers in reply to requests - negotiators run the risk of setting up unrealistic positions that "don't work in the real world".

      What also emerged is that collective business advocacy sends a stronger message to government. In developed countries, governments consult extensively with their service industries before the start of negotiations on the General Agreement on Trade in Services.

      Powerful business groupings facilitate the dialogue between business and government: the Coalition of Services Industries in the United States and the European Services Forum (ESF) in the European Union (EU) collect and submit important information for WTO negotiations.

      The ESF represents service industries across the EU. Its membership comprises 36 European trade federations and 50 international companies, and covers a wide range of service industries including banking, insurance, telecommunications, postal and delivery services, aviation, shipping, tourism and hotels, retail distribution, catering, legal services, accountancy, management consultancy, architects, engineers, surveyors, information technology services, publishing, audio-visual, energy services and environmental services. Position papers that deal with the market access negotiations and rule-making can be downloaded from the ESF's web site (http://www.esf.be).

      Where was business? 

      Do current implementation problems of the trade agreements in many countries result from the lack of involvement of the business community in trade negotiations? It would be interesting to explore to what extent implementation problems with the agreements concluded during the Uruguay Round in the 1990s are due to past failures in business advocacy. Why, for example, were so many governments compelled to renegotiate the implementation of the Agreement on Trade-Related Investment Measures? Was it because they did not discuss the business impacts of eliminating protective measures within the timeframe specified in the Agreement beforehand with concerned enterprises, such as domestic automotive component producers?

      Many Business for Cancún participants also pointed to examples in the industrialized world, where the business sector sometimes puts forward its interests so convincingly to governments, that they then represent them without an appropriate political filter. They gave examples from the areas of agriculture and the Agreement on Trade-Related Intellectual Property Rights, where business interests had obviously influenced some governments' negotiating positions.

      Need for change is clear 

      Both the business sector and government in developing and transition economies are increasingly interested in establishing a business advocacy infrastructure and culture. ITC's partners are looking for 'best practice' models in order to learn from what other countries are doing. Frequent questions include: "What are the institutions involved?", "How are different interests harmonized?" and "What are the basic techniques used in business advocacy activities?"

      Building up business advocacy 

      There is no general recipe for building a business advocacy infrastructure and culture. The process depends on what already exists in a country, including its legal rules and traditions, the structure of the state and the power of local governments. However, there are some 'generic' issues to consider:

    • Legal requirement to consult. Countries may consider implementing legislation requiring government bodies engaged in trade negotiations to hear the views of all stakeholders, including the business community, before formulating negotiating positions.

       
    • Regulation of advocacy/lobbying. In some countries, business advocacy or lobbying is subject to legal regulations. In others, it is not. Depending on the legal traditions and public perceptions of lobbying, countries may decide to enact legislation to legalize and regulate business advocacy.

       
    • Industry-level system for feedback. Trade associations may find it useful to establish a system to collect, analyse and submit business views to the appropriate government bodies. As part of their role of disseminating information, the same associations should inform their members about developments of direct business concern in the multilateral trading system.

       
    • Technical assistance and training. Business organizations need to be able to follow and analyse developments in the multilateral trading system. It requires a combination of local and international efforts to build, strengthen and maintain this capacity.

       
    • Best practice examples. Well-functioning examples of business advocacy from developed as well as developing and transition economies can provide a model for others to follow. In the Business for Cancún meeting in Johannesburg (March 2003), participants listened with great interest to Ambassador S. Marchi's presentation on Canada's business advocacy system. They requested case studies and more exchanges of experiences on the subject. ITC is collecting best practice examples to complement and illustrate its recent paper on "Business Advocacy in Trade-Policy Making".

       
    • Awareness-raising for firms. To understand fully the value of participating in business advocacy for trade, business people need to be aware of the implications of the WTO system on their business interests. Information events, discussion panels and business round tables organized by business associations and trade support institutions can contribute to raise this awareness.

      A boost to the trading system 

      Functioning business advocacy in all countries would improve the multilateral trading system. Today the situation is lopsided. In the developed country camp, powerful business organizations support their negotiators, making WTO negotiations easier and facilitating the implementation of the commitments governments undertake.

      Developing countries, due to the lack of appropriate business advocacy mechanisms and culture, are missing some important opportunities. This deficiency represents a danger to the proper functioning of the multilateral trading system. To remedy this situation, the business sector in developing and transition economies, as in the developed world, needs to become a constituent part of the present multilateral trading system. As a former WTO Representative of Trinidad and Tobago said, during a Business for Cancún e-discussion: "Business advocacy sometimes tends to be discussed as though it is one of several options available to businessmen and women in developing countries. It is not. There is no other way to influence policy."

      Good business advocacy for trade policy requires a common effort from business communities, governments and relevant international organizations. And why not start the work immediately? After all, ministers in Doha adopted a 'development' agenda!


       


      Business for Cancún regional meetings 

      ITC initiated the "Business for Cancún" regional meetings to help developing countries and economies in transition prepare for trade negotiations during the WTO Ministerial Conference in Cancún, Mexico. Each meeting brings together business leaders and WTO negotiators from countries in a region to discuss their country's preparations for the Cancún Conference. The meetings help prepare the business sector to contribute to their government's negotiating position.

      In 2003, ITC organized meetings for the following regions and country groupings:

    • Asia (Kuala Lumpur, Malaysia, January)

       
    • Southern Africa (Johannesburg, South Africa, March)

       
    • Least developed countries (Dhaka, Bangladesh, May)

       
    • Latin America (Santa Cruz, Bolivia, June)

       
    • Central and Eastern Europe (Zagreb, Croatia, July)

       
    • Caribbean Community (Kingston, Jamaica, July)

       
    • West Africa (Dakar, Senegal, August)


       

      For more information about business advocacy or ITC's Business for Cancún initiative, contact Peter Naray, ITC Senior Adviser on the Multilateral Trading System, at naray@intracen.org