WTO/DDA & Cooperatives

JinKook KIMAgricultural Advisor

International Cooperative Alliance

National Conference on Cooperative Development in India19-20 December 2007, New Delhi

Today• State of Play and Prospect of DDA

• DDA impact on Cooperatives

• Myth and Reality of Cooperatives

• Cooperative Starategies

• Epilogue

Brief History of DDA

• DDA: launched in 2001

• Scheduled to conclude in January 2005 - Missed the deadlines many times in

Cancun, Hong Kong Ministerial Meeting

• Ambassador Crawford Falconer, chairman of the DDA farm negotiations, presented a draft modalities text last July.

Current State of Play

• In-depth negotiations have been proceeded in Geneva since the beginning of September

• Substantial progress has been achieved. However some technical issues remained

- Domestic subsidy, Special products, SSM, Sensitive products

Next year plan of DDA

• 3-8 January 2008: Room E meeting

• 26 January : mini-ministerial conference(Davos) - 23-27 January: World Economic Forum

• 21 January: Falconer start to write the Draft

• Lamy in November TNC: Conclusion of DDA will be in 2008

Prospect for DDA

• Single undertaking: NAMA, Service - nothing is agreed until all issues are agreed

• US Presidential election

• US’s TPA (Trade Promotion Act) renewal, even temporary, seems to be getting bleaker

- mandate allowing administration to put trade deals to congress for a yes or no, not to amend the lines

• France’s take over the presidency of EU during the second help of 2008

My view of DDA• Without a doubt, the upcoming year will be heavily

loaded with political decisions.

• The more aggressive verbal attacks could reflect that we are getting closer to a deal. Next year will be very interesting. (Keith Rockwell, spokesman for WTO)

- USTR Susan Schwab criticize Brazil and India

• Blame high, Confidence low in WTO heads into another year for free trade pact (Bradley Klapper, AP)

• the DDA conclusion will be, at the soonest, at the end of 2009

DDA failure?

• Mrs. Clinton Interview with FT.

• The WTO collapse in midst of dispute is Good News for the developing countries?

• A NO deal is better than a BAD deal?

Bilateral & Regional FTAs

NAFTA(3countries)Population:411millionGDP:11100billionUS$

ASEAN(10)Population: 550million

EU(15 countries)Population:370millionGDP: 7840billion US$

FTAA(34countries)2005

2004.MayEU Enlargement(25Countries)

EUㆍACP Coalition: 70 Countries MERCOSUR(4)

Brazil, ArgentinaUruguay, Paraguay

ASEAN FTA -China, Japan, India- EU

“The number of regional trade agreements (RTAs) has grown at a rate of 15 per year since 1995, more than five times the rate during the previous 45 years." The number of BTA and RTA

negotiations has been at its highest since the WTO was established.” (FAO)

Speeding up a shift to BTA/RTA

• USA: The Bush administration has signed 14 free-trade deals and is negotiating another 11.

• EU said its priority is Doha but, they have plan B, more focused deals especially in Asia.

• Within Asia, the number of trade deals is exploding.

Impairing developing countries

• Developing countries have less collective powers like G20

- Big Countries will Dominate the world trade

• Losing the principle of non-discrimination - No training, surveillance, DSB system in

BTA/RTA

• Risk losing what already agreed - export subsidy, cotton and DF/QF,

Developed Countries’ press

• UNFCCC in Bali, Indonesia - Climate friendly environmental products to

combat global warming such as solar panels, wind mill turbines, clean coals and energy-efficient lighting.

• Developing countries status differentiation. - Mr. Kamal Nath has opposed the idea of

terming India as an emerging country.

Eroding the WTO System

• The suspension of the Doha talks could trigger an increase in the number of rows

• A surge in threats to achieve through highly successful dispute settlement system and undermine a WTO itself

• Looking for alternative system for the future

Impact of DDA on Cooperatives

• The special measures have provided to cooperatives on the condition that cooperatives perform a special service to the community.

- Tax benefits, Loans, Grants, Access to public

works and programs, Special procurements provision.

• However cooperatives are under threat by the effect of free trade agreements and rapid globalization process for level playing field

Potential dangers for cooperatives

• WTO/DDA is moving toward harmonization in the trade rules, legislation, accounting standards and all based on the understanding that enterprises are capital centered companies

• Without a proper understanding of what cooperatives are, its identity, practices and traditional roles in the social economy.

• some of the support measures that cooperative enjoy today, could be put at risk.

Misconceptions about cooperatives• Abandonment of original purpose• The perception of large member dominance• Cooperative practices versus principles• Just like any business• Don’t care about members• Government favouritism• Cooperatives are socialistic institutions• Not really a business• Top down cooperatives (Bruce Anderson, Cornell University)

Opinion Market Management• Important time to persuade the policy makers,

bureaucrats, stake-holders to understand the difference from Private Investor Owned Firms in terms of its birth, identity and roles in the society.

- Cooperative Value - Roles of Cooperatives for poverty Reduction

- Contribution to the Society and Economy

Reality of cooperatives

• There is no reason to believe an organization should be any less successful just because it is a cooperative.

• Coop power in the world

• US

• Rwanda

Major role in the Economy

• At present, there are 568,000 agricultural cooperatives and 408 million members in the world.

- 800 million individual members and 100 million employees in the whole cooperative sector

• Market share - EU: 50% of supplying farm inputs and 60% of agricultural products - Canada: Grain 64%, Forest product 73% - Uruguay: Milk 90%, Brazil: Grain 43% - Korea: Agri- marketing 40% - Burkina Faso: Cotton 77% (source: www.copacgva.org)

Farmer cooperatives Business (US)

(source: Jean –Mari Peltier, 60th Annual Meeting of NCDC,Huston TX, USA, Jan. 29 – Feb. 2, 2006)

Coffee Cooperatives in Rwanda

• Rwanda is best known for 1994 genocide in which 800,000 people slaughtered during fighting between Hutu tribesman and their Tutsi rivals

• Since 2001, 11 cooperatives with 15000 members are created

• The coop’s income has jumped from 650,000US$ in 2004 to 1.2million US$ in 2005 and is expected to reach 3million US$ in 2006.

• The coops are also helping drive reconciliation between Hutu and Tutsi farmers. (TIME, Sep.19,2005)

Brands

Coop’s Multufunctionality

• Coops’ Multifunctionality is more important than other forms of enterprise

- Poverty reduction through cooperatives

- Preservation of culture and history

- Employment

- Training School of Democracy, Cooperation,

Economy and Organization

- Hidden functions of cooperatives

Cooperative Model of Enterprise• Cooperative Model, like Democracy, is not

perfect, but it’s better than others - Those who built the America are not individuals

but cooperatives

• Moreover, in this day and age of corporate scandals the likes of Enron, WorldCom, Tyco, Adelphia, one may come to the conclusion that most cooperatives practice a higher degree of ethics and exhibit less degree than a lot of public corporations. (Bruce Anderson, Cornell Univ.)

Reasons for poor performance

• Conflicting goals• Poor management• Poor board performance• Inappropriate strategies or poor

implementation• Inadequate capitalization• Lack of member oversight• Overly sensitive to member concerns

Other Challenges to Cooperatives• Globalization

• Concentration to MNC

• Consumers’ needs change

• Safety and Quality

• New technology- IT

• Bio-fuelWe need Innovation!!!!!

Strategies to Cope with challenges

• Merge and Acquisitions• Niche Market Developments • Capital Increase• Brand and Image • Social Responsibility• Sustainability • Climate Change Friendly• Training and Education

Epilogue: Age of Information

• Information Quotient is important

- IQ » EQ » NQ » SQ » MQ » IQ • Information Sources

- USDA, WTO, COPA/COGECA, JA Japan, NACF Korea, ICA-AP

A SMALL TRUTH TO MAKE LIFEA SMALL TRUTH TO MAKE LIFE 100%100%

IF equal to

Hard WorkHard Work : : H+A+R+D+W+O+R+K

8+1+18+4+23+15+18+11 = 98%

KnowledgeKnowledge : : K+N+O+W+L+E+D+G+E

11+14+15+23+12+5+4+7+5 = 96% LoveLove :: L+O+V+E

12+15+22+5 = 54%

LuckLuck : : L+U+C+K

12+21+3+11 = 47%

most of us think this is the most important ???

Then what makes 100% ?

Is it MoneyMoney ? ... NO ! ! !

M+O+N+E+Y

13+15+14+5+25 = 72%

LeadershipLeadership ? ... NO ! ! !

L+E+A+D+E+R+S+H+I+P

12+5+1+4+5+18+19+9+16 = 89%

ATTITUDE ATTITUDE

A+T+T+I+T+U+D+E 1+20+20+9+20+21+4+5 =A+T+T+I+T+U+D+E 1+20+20+9+20+21+4+5 = 100%100%

It is It is OUR ATTITUDEOUR ATTITUDE towards Life and Worktowards Life and Work

that makes OUR Life that makes OUR Life 100%100% ! ! ! ! ! !

• Thanks

• kim@ica.coop• +41 22 929 8812