9:33 AM Jul 23, 1993

QUAD TARIFF ACCORDS SHOW TNC LOBBY POWER

Geneva 21 July (Chakravarthi Raghavan) -- The tariff cuts agreement at the Tokyo G-7 Summit, some of whose tariff-line details have now been provided by the Quad countries at the GATT, shows the lobby power of the major transnationals, particularly in the pharmaceutical sector.

The Quad members (Canada, EC, Japan and the United States) on Wednesday evening tabled their document in the Uruguay Round market access negotiations (in the Group of Negotiations on Goods chaired by Canadian Germain Denis) providing some details, at HS tariff-lines, of their Tokyo tariff-cutting accords. These have been circulated to the others.

This document was promised to the other participants by the Quad countries on 15 July, but it has taken them six more days to agree among themselves on the details.

It does not cover the four part agreement of the Quad in Tokyo, but only the parts calling for elimination of tariffs in some sectors and harmonisation of some others.

The two other parts of the Tokyo agreement call for further negotiations to reduce tariffs on products with a 15% or more tariffs, with the objective of achieving a 50 percent reduction, and other tariffs where the aim is to negotiate a one-third cut.

Neither the Quad document or the Tokyo announcement clarify whether the tariff cuts are simple, trade-weighted or otherwise to achieve the 50 percent and one-third cuts envisaged.

A first glance through the Quad document proves what many developing countries have feared, and the Group of 77 expressed at ECOSOC, namely, that the so called market access openings will do nothing to improve the export opportunities for the developing countries and cover items with the largest trade, involving intra-industry TNC specialization, among the industrialized countries, and those where the developing countries, while not being exporters, have some production and large growing markets.

The G7 Tokyo Economic declaration has called on the other participants in the Uruguay Round "to match" these market access concessions.

This, together with the other parts of the Uruguay Round agreement and the changes in development strategies pushed by the World Bank will have the result of bringing the health and agricultural sectors of developing countries under the tight control of transnational corporations and their oligopolies.

The Trips accords will usher in global standards and norms and detailed rules, including import monopolies, particularly in the pharmaceutical and health sectors.

The World Bank is already pushing developing countries, through structural adjustment programmes (and the philosophy on health care and privatization expounded in the World Development Report, 1993) to privatize many of the clinical health services.

The zero tariff cuts and removal of other non-tariff barriers envisaged in the G7/Quad Tokyo accord will provide the other arm of this pincer and will have the effect of knocking down import barriers and ensuring monopolistic market domination by the TNC pharmaceutical companies on many common remedies, vitamins and other medicaments, many of which no longer even have live patents.

Several of the items fall within the area covered by the Dunkel Draft Final Act texts on agriculture which call for a minimum of 15 percent border tariff cut at hs product line and to be implemented over six years by industrialized countries and by developing countries over ten years.

By including such items in the Tokyo agreement, which was purportedly one covering 'industrial products', the Quad would appear to imply that they would make the reductions (whether zero-for-zero, harmonisation or other reductions) over a five year period as provided for in the Dunkel text. The details of the zero-zero tariff cut agreements, with their exceptions, in pharmaceuticals, construction equipment, medical equipment, furniture, agricultural equipment and chemicals, have been given in the Quad document at the four-digit HS classification and in some cases, particularly for exceptions, at the six digit levels, and in some cases with product descriptions -- where the six-digit level still contains a basket of similar products.

The actual trade, exports and imports, and production at these detailed levels in countries, as well as a careful scrutiny of the description of the products included in a tariff line would need to be carefully examined before any detailed judgement could be made, an expert observer commented.

For many developing countries, he said, it is even doubtful whether their tariff negotiators have such detailed information and/or the real effects of the products within their economy and sectors and its weight within their trade and economy, as well as health and other areas.

The industrialized countries have taken months and weeks to talk and agree at an aggregate in these matters, and the developing countries are going to be pressed to and engage in bilateral and plurilateral market access negotiations over a short period.

However, thanks to the enforced delays of the Quad having to do further homework before putting forth their clarification, there are hardly 2-3 working days for bilateral or plurilateral negotiations before the GATT virtually closes down for the summer. This gives the capitals 3-4 weeks of intense work to prepare themselves.

But the market access negotiations will not be an easy bargaining based on tariffs and export interest.

A country might not be exporting, or even producing some product at present, but in the not too distant future that product might be very important for improvement of health, nutrition and other aims.

A zero-tariff or low-tariff binding, coupled with the free play for trade-mark and name/brand product marketing techniques would soon establish a tight monopoly and control for foreign TNCs.

In the GATT and the "market-philosophy" pushed on the developing world, while the governments and the State are discouraged, prevented or have abandoned advance planning and formulation of strategies, global central planning is being carried out by the TNCs based in the major ICs, who have cross-licensing and other cross-production agreements and strategic alliances among themselves.

A cursory glance of the HS product classifications listed by the Quad in their listing of the tariff agreements shows that in the pharmaceutical sector all intermediates used for production of pharmaceuticals as well as pharmaceuticals themselves including over the counter medicaments will be brought under zero-tariff rule.

The products seem to include, for example, vitamins, hormones, insulin, penicillin, tetracyclines and many other anti-biotics, human or animal gland derivatives, surgical sutures, surgical gauzes with medicaments, chemical contraceptives etc.

In many of these lines, for several decades now, there have been no "new inventions or discoveries" for the many ills afflicting the sick in the developing world or the industrial world for that matter, and the socalled new drugs are merely reformulations of old ones, with a few new add-ons of little medicinal value thrown in and marketed under brand names.

In other areas sectors, wherever the developing countries are also competitive suppliers or emerging as one, there have been exceptions and qualifications. In the case of furniture, for example, products of oster bamboo, cane and rattan are to be excluded from zero-tariff cuts unless Indonesia removes export restrictions on the raw materials. Indonesia now is probably the one source of raw material -- other Asean countries having virtually denuded their forests of these material through cutting and exports.