Africa at risk as rich nations plot new deal
What you need to know:
- Trade experts warned that the adoption of those rules will kill companies in the developing world, deny government taxes and the right to regulate trading activities in their jurisdiction.
- Kenya currently hopes to catch multinational tax cheats through the Global Forum on Tax Information Exchange, which focuses on the corporate tax that multinationals channel to countries where they can either pay less tax or avoid paying altogether.
The United States and the European Union are pushing to have multinationals exempted from local laws in developing countries.
If adopted, the proposed trading rules will mean that multinationals such as Google, Facebook and financial institutions with roots in US and EU will operate locally without submitting to local regulation.
They will not be required to give local companies preference in procurement nor will their subsidiaries be required to have local participation in their ownership.
Trade experts warned that the adoption of those rules will kill companies in the developing world, deny government taxes and the right to regulate trading activities in their jurisdiction.
Presented to the World Trade Organisation (WTO) ministerial meeting, currently going on in Nairobi, as “new issues” the rules were rejected at the Singapore Ministerial meeting in 1996.
“The developed countries have insisted that if developing countries want the Doha agenda to continue, they must agree first for the new issues to be part of the negotiations,” Ms Sophia Murphy senior adviser, Institute for Agriculture and Trade Policy, University of British Colombia, told the Daily Nation on Thursday.
Ms Murphy added that under the procurement regulations that are being pushed by developed countries at the WTO, foreign firms want to bid for local contracts because they believe they are more efficient, “if they take the contracts, there will be no opportunity for Kenyans”.
“The investment regulations will reduce barriers to foreign investors to come and invest locally, competition policy on the other hand supports the procurement rules,” said Ms Murphy.
The ‘Singapore issues’ have emerged as great barriers to the WTO negotiations, almost stalling talks.
CATCHING TAX CHEATS
The European Union (EU) Commissioner for Trade Cecilia Malmström on Wednesday evening, revealed that the commission is very interested in having the new issues tabled for discussion.
“I believe that these regulations will in turn strengthen African economies, though if any issues emerge in the process, we will deal with them through Economic Partnership Agreements which are tailor-made for the region,” said Ms Malmström.
In case the regulations are tabled for the next round of discussions, there is a possibility that they will be adopted.
The proposals on procurement, investment and competition basically mean that developed countries will dictate the terms under which their companies operate in poor countries.
Kenya, as one of the 162 member countries of WTO, will then be open to multinationals whose accounts are not made public or regulated by the Capital Markets Authority or subject to the Companies Act.
Tax evasion by multinationals will almost certainly follow.
Kenya currently hopes to catch multinational tax cheats through the Global Forum on Tax Information Exchange, which focuses on the corporate tax that multinationals channel to countries where they can either pay less tax or avoid paying altogether.
More than 453 global civil society groups are against inclusion of these new issues in the Doha discussions. The activists have since Tuesday sounded the alarm that developing countries are at risk if they agree to the new agenda.
Some are outraged that the same countries hatching plans that will hurt African goods in the global market are coming back to give Africa aid.
“After 20 years of the WTO corporate model, massive displacement of farmers, increased inequalities, financial crises, massive climate crises we as the civil society are clear, there are immediate changes that must be made at the current WTO, business cannot continue as usual,” the activists, represented by the global network Our World Is not For Sale, said in a statement.
Ms Marie Clarke, executive director, Action Aid USA, told the Nation by phone that the wider concern is about the food aid draft that will allow for emergency food aid.
“The draft does not distinguish between emergency food aid and food aid. This is a plot to enable foods from developed world that will distort food markets. It will be impossible for smallholder farmers operating locally to compete with the international products,” she said.