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Cablegate: Labor Leader Warns On Doha

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DE RUEHSA #3650 2901523
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R 171523Z OCT 07
FM AMEMBASSY PRETORIA
TO RUEHC/SECSTATE WASHDC 2302
INFO RUCNSAD/SOUTHERN AF DEVELOPMENT COMMUNITY COLLECTIVE
RUCPDC/DEPT OF COMMERCE WASHDC
RUEATRS/DEPT OF TREASURY WASHINGTON DC

UNCLAS PRETORIA 003650

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DEPT PLEASE PASS TO USTR FOR P.COLEMAN

E.O. 12958: N/A
TAGS: ECON ELAB ETRD SF
SUBJECT: LABOR LEADER WARNS ON DOHA


1. Summary. Congress of South African Trade Unions (COSATU)
General Secretary Zwelinzima Vavi criticized the Doha Round
trade negotiations in a recent speech. Vavi said that
developed country trade negotiators only pay "lip service" to
development issues, and he praised the South African
Government (SAG) for joining the Group of 11 and standing up
for the rights of developing countries in the Doha talks.
While warning that Doha poses a threat to industrial jobs in
South Africa, Vavi acknowledged that a multilateral trading
system is important for developing countries, since bilateral
negotiations would always favor stronger nations. End
Summary.

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DEVELOPMENTALLY CHALLENGED
--------------------------

2. Congress of South African Trade Unions (COSATU) General
Secretary Zwelinzima Vavi provided labor's perspective on the

SIPDIS
Doha Round during remarks at the South African Institute of
International Affairs on October 9. Vavi complained that
Doha was intended to be a "development round" but had turned
into a traditional trade negotiation, with development issues
being placed at the "bottom of the list" of priorities after
agriculture, non-agriculture market access (NAMA) and
services. According to Vavi, developed country negotiators
are only paying "lip service" to development issues.

3. In Vavi's view, a "terrible trade-off" is being offered
to developing countries: they are being asked to lower their
tariffs on industrial goods in exchange for lower subsidies
and more liberal trade in agriculture. The COSATU boss
admitted that reductions in agricultural subsidies would be
good for the developing world, but he insisted that the price
being asked in return was too high. He warned that current
Doha proposals would "deindustrialize" South Africa and
reduce the economy to tourism and primary products. "We will
have to put on animal skins and dance to entertain tourists,"
he said.

4. Vavi said that the Hobson's choice being presented to
developing nations would "have a devastating effect on
employment in South Africa and seriously restrict South
Africa's capacity and policy space to be able to
industrialize and move up the value chain." Vavi also warned
about any commitment that could bind South Africa. Without
offering details, he said that the GATS agreement was
hindering the SAG's ability to "remedy past injustices" in
the health care system.

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WTO OR BUST
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5. Despite Vavi's lurid Doha rhetoric, he emphasized the
importance of multilateral trading rules and the need to
support the WTO system. Bilateral trade negotiations would
always favor the stronger nation, he said, asking, "Can you
imagine how a trade negotiation between Germany and Lesotho
would come out?" He praised the SAG for joining the Group of
11, which had helped developing countries "avoid being
steamrolled by the U.S. and EU." According to Vavi, it is
"better to be in the WTO and fighting battles and aligning
positions there, then to be on one's own." (Comment. Vavi
failed to recognize the willingness of large countries to
provide unilateral trade benefits, such as AGOA. End
Comment.)

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COMMENT
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6. The large bulk of COSATU's 1.8 million members work in
mining or manufacturing. COSATU, like most trade unions, has
had a rough time trying to unionize farm workers, who could
be among the beneficiaries of the Doha round. Vavi's
comments reflect his membership's concern in protecting their
jobs not only from casualisation and outsourcing but also
from competition with cheaper labor in China and India. The
South African textile industry has been in decline since the
expiration of the multi-fiber agreement, and the loss of tens
of thousands of textile industry jobs has made trade
unionists leery of the benefits of free trade.
Teitelbaum

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