Undeterred by the protracted political crisis, Lebanon will begin its third round of negotiations for membership in the World Trade Organization (WTO) in Geneva next month, but civil society groups fear that the costs of accession could far outweigh the benefits of increased access to Western markets in the absence of a clearly defined national development strategy.
WTO entry will also allow Lebanon to enter into bilateral treaties with stronger economies – such as the proposed Free Trade Agreement (FTA) with the US – requiring weaker governments to impose market liberalization measures above and beyond international norms. Fulfilling treaty obligations has negatively impacted local producers and restricted access to basic services and affordable healthcare in nearby countries like Egypt and Jordan.
With the Doha round of WTO talks indefinitely on hold, the EU and the US have aggressively pursued regional and bilateral trade agreements to attain concessions they would not be able to get through multilateral negotiations since they bypass the WTO, according to a recent report from the UK-based Oxfam charity, "Signing Away the Future."
Last November the United States signed a Trade and Investment Framework Agreement- essentially a memorandum of understanding for a future FTA -with Lebanon under what Oxfam believes to be a broader strategy to establish a consistent trade regime tilted toward US interests in a base of middle-income countries, said the NGO’s policy officer for the Levant, Aiman Mackie.
"Yes the Lebanese market is small and wouldn’t make a dent in the US economy, but if you establish enough of a precedent in a bloc of weak countries like Lebanon, Egypt, and Jordan, they can actually compel their bigger partners to adopt similar trade norms based on what is already in place due to bilateral agreements," he explained.
Though the terms of each FTA are determined after discussions between the parties, the position of US negotiators is far superior to that of Lebanese, Jordanian, or Egyptian delegates, Mackie argues. Once agreements go into effect, the weaker government often forfeits the ability to block trade and investment that contradicts public interest or that of certain sectors.
"Once an FTA is in place, a US manufacturer might realize that Lebanese cedar wood appeals to a niche market in the states," Mackie offered as an example. "Cutting down cedars violates Lebanese law, but most countries sign away the right to prosecute trade violations that are not in national interest."
In addition, according to Oxfam, US pressure on governments to boost protection of intellectual property rights (IPR) that go well beyond those needed for WTO membership has adverse affects across the poorest segments in the population.
Since Jordan signed an FTA with America in 2001, the cost of medicine has increased 20 percent due to the introduction of a form of patent protection – "data exclusivity" – which benefits pharmaceutical companies by limiting access to generic medication, a separate Oxfam study released last week said.
Heightened IPR protection trickles down to the agricultural sector – which accounts for 70 percent of Levantine economies – as well, making farmers dependent on seeds produced by multinational corporations.
Farmers are prevented from breeding their own seeds according to the IPR measures of bilateral agreements, making them dependent on imports. Global companies commonly jack up prices of seeds shortly after introducing them, pricing small farmers out of the local market and depriving them of their livelihood.
But certain terms could benefit farmers in developing countries as much as their Western counterparts, namely reciprocal zero-tariff market access.
Arslan Sinno, vice president of the Lebanese American Chamber of Commerce and owner of the Dora Flour Mills, welcomes Lebanon’s future WTO entry and the FTA with the US since it will give local manufacturers – who already import most of their raw materials – more access to Western products, and raise the bar for locally products.
"We will benefit from an FTA because it will open up US market to Lebanese products," Sinno said. "And local producers don’t have anything to worry about because imported processed goods are too expensive to compete with local goods, but they will force them to start complying with international standards."
But the increased market access gained by signing an FTA can ultimately play into the hands of the US agricultural sector, due in large part to the government’s failure to prepare farmers to compete with a flood of cheap imports or to boost exports to Western markets, argued the head of the Lebanese Center for Policy Studies, Oussama Safa.
"We are for liberalizing trade … and we think the FTA can be a step in right direction but if the government negotiates behind closed doors, without warning small industries, particularly the agricultural sector, the impact will be disastrous," Safa told The Daily Star.
The impact of the FTA on small farmers could be minimized, he said, if the state implemented programs to improve production methods to boost output and make products compliant with export standards, but so far that has not happened.
According to Lama Oueijan, an adviser to the Economy and Trade Ministry, the government is increasing farmers’ access to information on export standards and compliance with international regulations, but it will not offer direct subsidies, in keeping with its anti-intervention policy.
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