An earlier draft (September 26) had allowed "less than full reciprocity" for developing countries, but this was dropped in the present text. Business sources in the US cheered the deletion of the phrase as they felt it would have "skewed tariff negotiations in favor of developing countries," according to a news report from "Inside US Trade" (dated November 9).

But more than that phrase was excluded. The least developed countries group as well as a group of seven African countries had proposed in Geneva that the first draft be amended: Instead of initiating negotiations, the Doha Ministerial should initiate a study process to determine how previous industrial tariff cuts have affected the local industries and jobs in developing countries. This process should be completed before the WTO decides on negotiations. A similar view had been expressed by African Trade Ministers in their Abuja meeting in September.

Despite such major parts of the WTO Membership adopting this position, it has not been reflected at all in the draft that is now before the Doha Ministerial. Neither has a "facilitator" been appointed to discuss this issue-implying that there is no divergence of views on this topic, when in fact there is a substantial difference.

Behind the LDCs' and African countries' concerns is the disastrous record of the effects of over-rapid liberalization in many African and other developing countries.

Evidence of extremely damaging "deindustrialization" was presented by Kenya, Mozambique, Nigeria, Tanzania, Uganda, Zimbabwe and Zambia in a proposal dated 19 October which they submitted to the Chairman of the WTO General Council as a replacement for the paragraph in the draft on industrial tariffs.

The African countries stated that many developing countries had already liberalized their imports of industrial products (as a result of structural adjustment) and this had led to serious problems, such as local industries losing market share, unemployment, and less government revenue.

The proposal provided many examples of African countries that had suffered deindustrialization, closure of local industries and serious loss of manufacturing jobs. The countries cited included Senegal, Cote d'Ivoire, Nigeria, Sierra Leone, Zambia, Zaire, Uganda, Tanzania, Sudan, Kenya, Ghana, Zimbabwe, Mozambique, Cameroon, and Malawi. The proposal cited a study published by Cambridge University Press authored by Professor Edward Buffie (2001), entitled "Trade Policy in Developing Countries" which collated what he calls "the most disturbing evidence" of post-1980 liberalization episodes in the African region. According to information collected in the book:

Senegal experienced large job losses following a two-stage liberalization program that reduced the average effective rate of protection from 165 percent in 1985 to 90 percent in 1988. By the early nineties, employment cuts had eliminated one-third of all manufacturing jobs.

The chemical, textile, shoe, and automobile assembly industries virtually collapsed in Cote d'Ivoire after tariffs were abruptly lowered by 40 percent in 1986. Similar problems have plagued liberalization attempts in Nigeria.

In Sierra Leone, Zambia, Zaire, Uganda, Tanzania, and the Sudan, liberalization in the 80s brought a tremendous surge in consumer imports and sharp cutbacks in available foreign exchange. The effects on industrial output and employment were devastating. In Uganda, for example, the capacity utilization rate in the industrial sector languished at 22 percent while consumer imports claimed 40-60 percent of total foreign exchange.

The beverages, tobacco, textiles, sugar, leather, cement, and glass products sectors have all struggled to survive competition from imports since Kenya initiated a major trade liberalization program in 1993. Contraction in these sectors has not been offset by expansion elsewhere in manufacturing. The period 1993-1997 saw the growth rates of output and employment in manufacturing fall to 2.6 percent and 2.2 percent, respectively.

Manufacturing output and employment grew rapidly in Ghana after liberalization in 1983 and generous aid from the World Bank greatly increased access to imported inputs. But when liberalization spread to consumer imports, employment plunged from 78,700 in 1987 to 28,000 in 1993. The employment losses owed mainly to the fact that a large part of the manufacturing sector had been devastated by increased competition from foreign imports.

The book also provides some information on other developing countries outside Africa. According to the author: "Liberalization in the early 90s seems to have resulted in large job losses in the formal sector and a substantial worsening in underemployment in Peru, Nicaragua, Ecuador and Brazil. Nor is the evidence from other parts of Latin America particularly encouraging: 'The regional record as it now stands suggests that the normal outcome is a sharp deterioration in income distribution, with no clear evidence that this shift is temporary in character.'

According to the African countries' proposal, such information "indicates that for many developing countries the effects of import liberalization can be negative and sometimes devastating, reducing their prospects for industrialization and indeed in some cases destroying the domestic industrial base. There is thus a need for the WTO to review the basis of its policies, rules and guidelines in relation to industrial tariffs." The proposal added: "Developing countries have an interest in obtaining more access to the markets of developed countries, especially in product areas where developing countries are able to benefit in. Thus, the study process will identify area where further liberalization should begin and which products should be targeted. Should the study show that because of their limited productive capacity and weak industrial base developing and least developed countries are unlikely to benefit from further liberalization, then they should be exempted from further tariff reduction.

"While this measure may be necessary, it may also not be sufficient for the purpose of giving an opportunity for the affected countries to rebuild domestic industrial capacity in view of the closure of local firms and industries. In order to take full account of this extremely serious situation, action should be taken as soon as possible, even when the study process is progressing.

"We propose that the rules of GATT 1994 be revisited to take this serious situation into account. Developing countries, which have been adversely affected, should be allowed to reevaluate tariffs beyond their allowed threshold levels in respect of specific products and product areas, in order to enable them to rebuild the domestic capacity that had endured a decline, or to prevent a decline in such domestic capacity."

The Africa countries then proposed that the paragraph in the draft Declaration relating to non-agricultural market access be replaced with the following:

"We agree to initiate a study process to be conducted in a working group to examine the issue of market access for non-agricultural products. The study process shall take into account the special needs and interests of developing and least-developed country Members, including:

(1) The effects that previous liberalization and tariff reductions have had, including on domestic firms, employment and government revenue;

(2) The effects that tariff peaks and tariff escalation in developed countries have had on the trade prospects of developing and least developed countries; and (3) the implications of these for future policies.

The study process shall focus on the reduction or elimination of tariff peaks and escalation in developed countries in sectors and products of export interest to developing countries. It should also clarify that, exemptions from further liberalization commitments shall be given to least developed countries and to developing countries that have been and would be adversely affected by such liberalization.

It should also clarify the appropriate framework, guidelines and rules that can cater to the different conditions and needs of Members, including non-reciprocity for developing countries, and the ability of developing countries to increase their tariff beyond bound rates in certain cases."

At a meeting of the heads of delegations at the WTO before the second draft was issued, the Kenya Ambassador spoke on the subject and introduced a summary of the proposal. Her statement was supported by several developing countries.

At their Abuja meeting, Africa Ministers also stated that "agreement to engage in industrial tariff negotiations is made conditional on completion of a study process which should include the effect of previous and any future tariff reductions on African countries' industries." The same sentiment and proposal was made by the Tanzanian Ambassador on behalf of the LDC Group in his statement in the WTO General Council in early October in response to the first draft Ministerial declaration.

It is thus very surprising that these concerns and suggestions have not been reflected in the revised draft declaration. According to the orthodox assumption commonly made by the IMF, World Bank and the WTO, trade liberalization is beneficial to poor countries.

In reality, over-rapid liberalization, carried out before a country is prepared to face the challenges, results in cheaper imports overwhelming the local industries. Thus, before a new round of negotiations is launched on industrial tariffs, a deep study of the conditions needed to prevent further deindustrialization should be undertaken, and the lessons from it applied to the modalities of future negotiations. Otherwise, liberalization in this sector may ironically lead to further damage to some developing countries' industries and their jobs.