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CHAIRMAN’S TEXT AND DEVELOPING COUNTRIES
by
Bhagirath Lal Das                                   

1.10.2001

OVERALL NATURE OF DRAFT DECLARATION

            The Draft Ministerial Declaration prepared by the Chairman of the General Council (henceforth called ‘the chairman’s text’ in this paper) is concise and clean, but it does not take into account the interests of the developing countries.  In fact, it leans heavily towards the positions of the major developed countries. It is a definitive expression of what the Ministerial Meeting 2001 is expected to consider and perhaps adopt. There are alternative formulations only in two subjects, viz., Investment and Competition Policy. The others have just one set of formulations, without any alternatives even within the formulations in the form of square brackets, except the one in para 16 on TRIPS. Alternative formulations and texts with square brackets are quite common in intermediate texts (as this one) in international negotiations, when there are differences among the participants. Considering the wide and serious differences among the WTO Members on a large number of issues, it appears quite strange that the chairman’s text is so clean. As will be explained later, it is mainly because the strong positions taken by the developing countries on several subjects have not been properly accommodated in the chairman’s text.

            It is understood that the chairman’s text is the outcome of a series of very arduous exercise of consultations which the Chairman undertook over the past several days. The text therefore reflects his appreciation of the situation on the differences among the Members on several issues. Perhaps the developing countries consulted by the Chairman were not able to put forth their views strongly in these consultations, or the Chairman simply did not consider their views important enough to be accommodated in the text.

            Anyway, now we have in our hands the chairman’s text without reflecting the strong positions of the developing countries in several areas. It is going to be the basis of further consultations and negotiations. And then the Chairman will come out with a revised text if necessary. It is important for the developing countries to get the balance restored to the text by incorporating their views and positions. The only way it can be done is by the developing countries clearly expressing their views and positions in further consultations with the Chairman and by suggesting specific formulations on different subjects formally through specific papers, submitted to the General Council.

The following sections discuss the areas where there are severe imbalances and problems and give some suggestions for incorporating the concerns of the developing countries in the chairman’s text.

OPEN ENDED ROUND WITHOUT A NAME (PARA 36-42)

            The chairman’s text launches an open ended new round of negotiations in the WTO, without mentioning the word “round”. It is contained in paragraphs 36-42, i.e., “organisation and management of the work programme”. This topic has four elements mentioned below which are characteristic of a “round”.

(i)                  A single date is specified for the conclusion of the various negotiations.(para 36).

(ii)                A special session of the Ministerial Conference, and not a regular periodic Ministerial Conference, will consider the results of the negotiations. (para 36)

(iii)               A Trade Negotiating Committee will be formed to supervise the overall conduct of the negotiations.(para 37)

(iv)              There is a special provision about who would participate in these negotiations. (para 39) In a normal WTO negotiation, it is presumed that the Members of the WTO will participate in the work.

There are three elements mentioned below which make the “round” open-ended, in the sense that new issues can be added on later.

(i)                  The work programme as a whole (which includes work in the areas of investment, competition policy, electronic commerce and environment) will “evolve in a balanced and forward-looking manner which responds to the diverse challenges faced by Members”. (para 42)

(ii)                The fifth Ministerial Meeting will take stock of the situation and provide political guidance. (para 36). In all the areas mentioned above, the result of the work will be placed before the fifth Ministerial Conference. Of course, it is a normal practice to place such reports to the Ministerial Conference; but here is a special situation when one sees it with the provision of evolving a balanced and forward-looking work programme as mentioned above. It does appear to give an opening for including new subjects in the negotiations.

(iii)               The outcome of the negotiations will be treated “as a single undertaking”. (para 38). If the negotiations are limited to the obligations in the existing areas, the concept of single undertaking has hardly any relevance, as it will be quite impractical to implement the new obligations in these areas only with respect to some Members and leave it out in respect of the others. Stipulation of “single undertaking” points towards the inclusion of new subjects, like investment and competition policy in the negotiations and agreements.

Risks

There is grave risk in starting a new “round” even with a short and limited agenda. The harmful consequences for the developing countries are the following.

(i)                  The past experience, particularly of the Uruguay Round, has shown that the agenda gets expanded midway at the instance of the major developed countries. Hence keeping the agenda limited in the beginning should not give us any comfort that the new issues will not come in later. In fact, the trend of the chairman’s text clearly indicates the possibility of new issues coming in midway, as explained above.

(ii)                Once a new “round” gets started in the WTO, the subjects covered there will take the central stage. The subjects of interest to the developing countries will not get attention as has been the experience in the past.

(iii)               The work programme is to evolve in a balanced way (para 42); which means that there will be balance in the results of the future negotiations and other work in this work programme. This leaves out the existing imbalances, which will continue to exist. This approach is certainly not satisfactory and fair from the angle of the developing countries. They have been pointing out the imbalances and inequities in the current agreements and asking for removing them.

(iv)              The subjects that have been currently selected for negotiations in the chairman’s text and the way they have been formulated are more in the interest of the major developed countries, rather than serving the interest of the developing countries. In this manner it is likely that the developing countries will land up undertaking more obligations without getting adequate benefit from the negotiations in the “round”.

(v)                New bodies like Trade Negotiating Committee, as envisaged in the chairman’s text, and a number of other subsidiary bodies will be established to carry on the negotiations in the “round”. Developing countries do not have the resources to participate in all these new bodies as well as in the existing bodies. Hence, they will be more marginalized in the WTO and will be loaded with more obligations.

Remedies

For conducting negotiations in the areas covered by the existing agreements, a “round” is not necessary at all. The negotiations can be conducted in the respective bodies with the supervision of the General Council and the results of the negotiations can be presented to the fifth Ministerial Meeting. Thus what should be done in the interest of the developing countries is the following.

(i)                  Paragraphs 36 to 42 in the chairman’s text should be completely deleted.

(ii)                In  place of these paragraphs, there should be a simple text saying that the negotiations and the other work envisaged in the Work Programme will be conducted in the respective existing bodies in the WTO under the overall supervision of the General Council.

(iii)               The General Council will place the results of the negotiations and the other work before the fifth Ministerial Conference.

(iv)              In considering the balance in the results of the work programme, the currently existing imbalances should also be taken into account; so that the final results ensure overall balance, taking into account both the existing obligations (which are grossly unbalanced against the developing countries) and the new obligations emerging out of the work programme.

IMPLEMENTATION ISSUES (PARA 10)

            The implementation issues have been given the appearance of importance and long coverage, but with no real decision on the major issues. Hence the assertion in this paragraph that the Ministers “attach the utmost importance to the implementation issues and related concerns raised by Members and are determined to resolve them” appears more rhetorical than providing any substantial benefit to the developing countries. The issues have been covered by a separate paper “Draft Decision on Implementation-Related Issues and Concerns”. It has two annexes: annex I which includes issues for decision by the General Council before the fourth Ministerial Conference, and annex II which includes drafts for decision by the fourth Ministerial Conference.

            The only clear decisions of specific and implementable nature in Annex I are the following.

(i)                  The Agreement on Sanitary and Phytosanitary Measures prescribes that while introducing a measure, a Member will allow “longer time frame” for compliance in case of the products of interest to the developing countries. Also it says that a Member should allow “reasonable interval” between the publication of a measure and its actual application. The chairman’s text on implementation has prescribed that the “longer time frame” and the “reasonable interval” will not be less than six months.

(ii)                The agreements on TRIMs and Customs Valuation allow for the consideration of the requests of developing countries Members for extension of the time frame of compliance beyond five years. This period has been extended for some developing countries that had applied for it.

(iii)               The Agreement on Subsidies provides for lesser obligations for some countries that have been listed there as having GNP per capita less than US$ 1000 per annum. The chairman’s paper on implementation has provided that a country will continue to be in this list until its GNP per capita per annum reaches US$ 1000 at 1990 prices for three consecutive years. Further, it also provides that a country which is taken out of this list will be again included in it if its GNP per capita per annum falls below this critical level.

All other decisions in this Annex are in the nature of “urging or requesting the Members”, “reaffirming some earlier position”, “directing the relevant WTO bodies to consider an issue further”, “taking note of some action” and similar formulations.

            The only clear and implementable decision in Annex II is on what is called “growth-on-growth” quota levels in textiles. It means that the growth in the quota in a year will be calculated over the base in the previous year which would have already included growth over the earlier year. Considering that the growth rates themselves are very meager, the provision of growth-on-growth will give only a marginal benefit to the countries. And even this meagre benefit will be relevant only for the next three years, as the developed countries are obliged to remove all quota restrictions on 1 January 2005.

            The other provisions in Annex II are in the nature of “instructing or directing or requesting the relevant WTO body to consider an issue”, “taking action based on a future decision of a relevant WTO body”, “calling upon anti-dumping investigating authorities to examine with special care”, “urging Members to offer cooperation in customs valuation process” and similar formulations.

            A glaring cosmetic and totally ineffectual provision is in para 6 of Annex II which “urges Members to apply, where possible, a higher de minimis level” in countervailing duty investigations. This is not in the form of obligation at all. First it uses the operative phrase “urges” and then it dilutes it further by putting in the phrase “where possible”. It is really amazing to find such a provision in this text, which claims to cater to the needs of the developing countries.

Risks

            The above analysis indicates the casual manner in which the implementation issues have been dealt with in the chairman’s paper on implementation. The benefits to the developing countries are at best extremely meagre. The paper is rather long, perhaps to give an impression of a serious attention and treatment; but it is extremely short on beneficial results for the developing countries. In fact the assertion in para 10 of the Draft Declaration that the Ministers “attach the utmost importance to the implementation issues…and are determined to resolve them” appears ironical to the extent of being even an affront to the intelligence of the developing countries Ministers who are expected to be satisfied by this effort. The developing countries are too conscious and aware by now to be carried away by such rhetorics and promises in the GATT/WTO system. They have been experiencing such tricks and treatment in the system for too long a period now.

            Also by separating out the implementation issues into a separate text, there is a risk that it will get into a second track, the first track being that of the issues in the Work Programme. In fact, the chairman’s text physically separates the implementation issues which is in para 10 and the Future Work Programme which is in paras 11-35. The past experience has shown that once some new work programme starts in the GATT/WTO system, it comes on the central stage and other work gets relegated to the back stage.

            Already, the implementation issues have remained on the table for the last 3-4 years and yet these have not received adequate attention, as is apparent from the chairman’s text. With this history in mind and with the treatment given to it in the chairman’s text, there is grave risk that the implementation issues will fall by the way side, once the Future Work Programme starts.

            These implementation issues have emerged out of the experiences of the developing countries in the implementation of the agreements from 1995 onward. Most of these had been identified up to 1998. There are new experiences since then and there may be new issues in implementation. But the risk is that there may be a pressure to freeze the implementation issues to the existing list and the new issues may not get entry for consideration.

Remedies

(i)                  The implementation issues should be brought on to the main stream of work in the Work Programme and should be on a faster track than the issues included in the Future Work Programme. The time-target for completion of the work on the implementation issues should be very much earlier than that for the Future Work Programme.

(ii)                There should be a decision that the implementation issues to be considered in the Work Programme are not limited to the ones listed so far. Based on further experience of the developing countries, new issues may be brought up and will be included in the Work Programme.

INVESTMENT (PARAS  18, 19)

            The chairman’s text gives two alternatives: one, to start negotiation aimed to establish a multilateral framework, and two, to continue the study process already underway. The order in which these two alternatives have been placed is curious; the start of negotiation comes first and continuing the study process comes second. Though there is no priority of sequence in such texts, there should be some rationale for placing one before the other. Objectively, the continuing work of study should have been placed first. Yet, for some unknown reason, the chairman’s text places it as second.

            Also putting these two alternatives is not indicative of an objective balance. An objective alternative to the start of negotiations should have been to close and discontinue the subject in the WTO.

            The text for negotiation contains some specific elements of negotiation in case this alternative is accepted. Some points have been included perhaps with the hope that the developing countries will be attracted by them. For example, it is said that there will be GATS type approach in pre-establishment commitments. Also it is said that special development, trade and financial needs of developing countries shall be taken into account as an integral part of the framework.

            The experience of the GATS has shown to the developing countries that the positive list –commitment approach, though somewhat less harmful, has not proved to be a safeguard against pressures on liberalization in areas of interest to the major developed countries. Also the stipulation of the development needs has not saved them from extreme pressures in several sectors where the major developed countries have deep interest. With such experience as the background, the developing countries are not likely to be reassured about the negotiation in the area of investment even if the entry commitment is on the pattern of GATS and development, trade and finance needs are stipulated to be taken into account.

Risks

            There is grave risk for the developing countries if the alternative given in para 18 is approved. An agreement in this area is bound to put constraint on the developing countries in their policies and measures for guiding foreign investment to serve their development needs and priorities. It is not likely to give them any benefit.

Also the study process in the WTO is not complete and a large number of the developing countries are not prepared for negotiations in this area, as they have repeatedly expressed.

Besides, initiating negotiation in this area in the WTO has serious and harmful implications for future. According to Article III of the WTO Agreement (Marrakesh Agreement), the WTO can only undertake negotiations concerning multilateral trade relations. Investment is not within “multilateral trade relations” and, as such, a negotiation in this area can be started in the WTO only after Article III is amended. In such a situation, if it is agreed to start negotiation in this area in the WTO, it will be presumed that investment falls within multilateral trade relations. This will open the flood gate for many other negotiations in the WTO in future. If investment enters at this stage, subjects like domestic taxation and even social policies may not remain far behind. All this will be extremely dangerous for the developing countries.

Remedies

            The alternative of starting negotiation contained in para 18 should be rejected altogether. There may be attempts at compromise formulations. But any formulation which implies, directly or indirectly, that this subject will be considered for negotiation should be rejected.

            The best course will be to remove investment altogether from the WTO work, so that this subject does not keep on creeping up repeatedly. But if that is not possible, the alternative given in para 19 may be retained. In that situation, it should be made clear that the study process will cover related subjects like: (i) the obligations of investors, (ii) the obligations of home governments regarding the conduct of investors and (iii) the implications of protecting the right of entry of labour along with protecting the right of investors.

COMPETITION POLICY ( PARA 20-21)

            Here again there are two alternatives: one, to start negotiations on competition policy, and two, to continue with the study process already going on in the WTO. As in case of investment, the rationale of sequencing of these alternatives is not clear. It would have been more rational if the work already continuing covered by para 21 was put earlier. Besides, as in case of investment, putting these two alternatives is not indicative of an objective balance. An objective alternative to the start of negotiations should have been to close and discontinue the subject in the WTO.

            The alternative of starting negotiation (para 20) contains some elements of the negotiation. But many other relevant elements are not included. For example, it does not contain some important elements like: (i) the obligations of the firms, (ii) the obligations of the home government regarding the conduct of foreign firms, (iii) need of multilateral surveillance on the mergers and acquisitions which by their very nature inhibit competition, and (iv) effect of government policies and measures on competition, e.g., imposition of anti-dumping duties.

Risks

            In any case, starting negotiation in this area is full of risks for the developing countries. The main objective of the major developed countries is to have a certain uniform level of competition policy in all countries, including the developing countries. It may not be in the development interest of the developing countries, as having an appropriate competition policy is a dynamic process and it depends on the level of development and the development objectives of the country. An exercise of working out a common minimum for the competition policy, which will naturally be the burden of the negotiation, will not be serving this purpose.

            Besides, the developing countries are not quite prepared for a negotiation on this subject, as has been said repeatedly by a large number of them.

            The start of this complex process is likely to divert attention from solving the problems of the developing countries in the WTO.

Remedies

            The alternative of starting negotiation, as contained in para 20, should be totally rejected. The best course will be to remove this subject from the current work of the WTO. However, if it is not possible, the next best alternative is to accept the alternative of continuing the study as contained in para 21. But the study process should include some important elements of competition policy, viz., the obligations of firms, the obligations of the home government, the implications of big mergers and acquisitions for competition and the implications of government measures for competition.

TRANSPARENCY IN GOVERNMENT PROCUREMENT, TRADE FACILITATION

(PARAS 22-23)

            These two subjects coming on from Singapore Ministerial Conference have been placed in the chairman’s text as subjects for starting negotiations. No alternatives have been given here, as has been done in case of Investment and Competition policy. The decision in the Singapore Ministerial Conference was that negotiations will be started in these areas only when there is full consensus. Many developing countries have been expressing strong opinion against starting negotiations in these areas at present. It appears to be a bold attempt in the chairman’s text to have the only alternative of starting negotiations in these areas.

            In respect of the transparency in government procurement, the exercise of working out the elements of an agreement on transparency has not yet been completed. To start negotiations appears premature. Similarly in respect of trade facilitation, a large number of the developing countries have been arguing that the exercise of facilitating trade should be undertaken by examining the appropriate provisions in the current relevant agreements, rather than by starting a new negotiation.

Risks

            As the elements of an agreement have not been finalised in the current exercise, the developing countries are not quite prepared for participating in the negotiations in the area of transparency in government procurement. A further risk is that the negotiation may not remain limited to the elements of transparency and may transgress into the area of market access in government procurement. Such fear arises because very high officials of the major developed countries have implied on several occasions that transparency is only an interim step, the real aim is the expansion of market access. Also, the proposals given by some major developed countries in course of working out the elements of an agreement also go much beyond transparency. Besides, the formulation in the chairman’s text regarding the negotiation being strictly confined to the domain of transparency is rather weak.

            In case of trade facilitation, the fear is that a new agreement may put constraints on the developing countries in respect of the discretion and flexibility which they have in the existing agreements.

Remedies

            The provisions in the chairman’s text for starting negotiations for agreements in these areas should not be accepted. The current process of working out the elements of an agreement in the area of transparency in government procurement and of studying the trade facilitation may continue. Regarding the work in transparency in government procurement, there should be a mandatory and definitive provision that the work must be limited to transparency.

WTO RULES, DISPUTE SETTLEMENT UNDERSTANDING (PARAS 24,25,26)

            Negotiations are being started for the clarification and improvement of disciplines in the areas of subsidy, anti-dumping and regional arrangement. In respect of the Dispute Settlement Understanding (DSU), however, there is a different formulation. Here the text starts negotiations on possible amendments on the basis of proposals by Members. The negotiation in the DSU is to be based on “the work done thus far”.

            It is not clear why the negotiation in the area of DSU is being restricted as to be based on the work done thus far. In fact, as in case of subsidies and anti-dumping, the negotiation in the area of DSU should also be for the clarification and improvement of the rules. Limiting it to be based on “the work done thus far”, prohibits the scope unnecessarily.

Risks

            The developing countries have already been having sad experience in the areas of subsidies and anti-dumping duties. These instruments are resulting in a lot of harassment to them. There may be a fear that the developing countries will be called upon to undertake new obligations in these areas in the negotiations.

            The current formulation in the chairman’s text in the area of DSU has the risk of leaving out the concerns of the developing countries about the working of the DSU. Also, it restricts the scope of negotiation. The developing countries have been expressing their dissatisfaction regarding some aspects of the working of the DSU. But their concerns will be left out if the current formulation continues.

Remedies

(i)                  Considering that the developing countries have had sad experience of the working of the agreements in the areas of subsidies and anti-dumping duty, there should be a clear stipulation that the developing countries shall not be called upon to undertake any further obligations in these areas. This understanding should be included in para 24.

(ii)                The negotiation in the area of DSU should be for clarifying and improving the disciplines in the light of experience of the working of the DSU. Para 26 should be accordingly amended.

AGRICULTURE (PARA 11)

            The chairman’s text only identifies the elements; a text in this area is to be formulated later. One has to wait for it.

SERVICES (PARA 12)

            In this area, negotiations are already in progress in the WTO in accordance with the work envisaged in the GATS. Guidelines and Procedures for the Negotiations have already been approved by the Council for Trade in Services. Now the negotiations will continue. The chairman’s text stipulates that the Ministerial Conference will reaffirm these guidelines and procedures.

Risks

            It is all right for the Ministerial Conference to take note of the guidelines and procedures; but there is risk in its “reaffirmation” of the guidelines and procedures. Such reaffirmation will amount to an approval at the level of the Ministerial Conference. In that event it will be extremely difficult to bring about any changes in the guidelines and procedures, if it is found later that some elements contained therein have to be amended.

Remedies

            Para 12 should be modified so that the guidelines and procedures are only “noted” by the Ministerial Conference and not “reaffirmed”.

MARKET ACCESS FOR NON-AGRICULTURAL PRODUCTS (PARA 13)

            This paragraph includes a major negotiation on industrial tariff. (The tariffs on agricultural products will be covered by the negotiation in the area of agriculture.) All sectors will be covered. The objective will be to reduce or eliminate tariffs, including tariff peaks and tariff escalation. Less than full reciprocity will be expected from the developing countries.

Risks

            The negotiation on tariff will be mainly targeting the tariffs of the developing countries. It is feared that heavy reduction of tariffs in these countries may hamper the growth of domestic industries and there may even be de-industrialisation in these countries.

            Tariffs peaks (very high tariffs in the developed countries on some products in comparison to their respective average tariffs) and tariff escalation (higher tariffs in developed countries on products with higher processing) have been the problems for the developing countries for a very long time. But these have not got any priority attention in the chairman’s text. There is a risk that these problems will again remain ignored and sidelined.

            “Less than full” reciprocity expectation from the developing countries is not adequate safeguard for the developing countries, as the term “less than full” may mean even marginally smaller level than full. Such a formulation may result in extraction of heavy concessions from the developing countries.

Remedies

(i)                  Before starting any negotiation on industrial tariff, there should be a study process to determine the effects of reduction of tariffs on the domestic industries of the developing countries. There have been country experiences of de-industrialisation as a result of tariff reduction in several developing countries. Such a study process will make it possible for the developing countries to formulate their positions regarding the tariff negotiation.

(ii)                There should be a specific decision that the reduction or elimination of tariff peaks and tariff escalation in the developed countries will not be conditional on concessions from the developing countries.

            (iii)       The term “less than full” reciprocity should be clearly specified.

(iii)               Before starting the negotiation in the area of industrial tariffs, a working group in the WTO should examine the elements mentioned above and formulate the modalities for the negotiation.

TRIPS (PARAS 14-17)

            The chairman’s text says that the procedure for geographical indication in case of wines and spirits will be finalized. It gives two alternatives in respect of the geographical indications for other products, viz., either a negotiation will start on this issue or the TRIPS Council will consider this issue further. Then instruction is given to the TRIPS Council to “give due attention” to subjects like relationship with the Biodiversity Convention, protection of traditional knowledge and non-violation complaints. The public health problems, particularly the availability of medicines at affordable prices, have been raised in the WTO by the developing countries quite forcefully. The chairman’s text does not include this issue in the main text; it refers to it in a footnote which, in turn, refers to a separate decision. The coverage of the issues in the area of TRIPS is far short of the specific proposals given by the developing countries in the TRIPS Council.

Risks

            If the issues are not addressed by the Ministers in this Conference, it is likely that they may not get adequate priority attention in the WTO and may remain ignored.

Remedies

            The chairman’s text should include these issues, e.g., (i) over-reaching role of Articles 7 and 8 of the TRIPS Agreement so that the provisions of the Agreement are interpreted in the light of the provisions contained in these Articles; (ii) clarification of provisions in Article 27.3(b) relating to essentially biological processes and micro-biological processes; (iii) extension of the transition period for implementation of Article 27.3(b); (iv) clarification that the non-violation complaints provision will not apply to TRIPS Agreement; (v) comprehensive coverage during the review in the TRIPS Council under Article 71.1 of the Agreement.

ENVIRONMENT (PARA 27)

            The chairman’s text instructs the Committee on Trade and Environment (CTE) to pursue its work and in particular it identifies two items for special attention. Thus it gives priority to these two items, thereby putting the other items to somewhat secondary position.

Risk

            The risk is that the other items will get low priority or may even get ignored in the work of the CTE.

Remedies

            It is important to include the other items for this special mention. Particularly, the issues of market access and relationship between TRIPS and environment should be included.

ELECTRONIC COMMERCE

            The text instructs the General Council to consider the most appropriate institutional arrangements for handling the work programme in this area. Further, the zero duty on electronic commerce is sought to be continued till the fifth Ministerial Conference.

Risks

            The work in this area has started at the instance of some major developed countries. This work is hardly of much importance and benefit to a large number of the developing countries. If a separate full fledged institutional body is created to consider this subject, there will be further addition to the bodies in the WTO, increasing the strain on the developing countries in effective participation.

            Further, having zero duty on electronic commerce provides direct benefit mainly to the major developed countries who are the main suppliers through this medium. The developing countries do not have the supply capacity. Hence the provision of zero duty amounts to a major concession by the developing countries without getting any commensurate concession in return.

Remedies

            The work in this field should not be expanded by establishing a new body for this purpose.

            Either the point about continuing the zero duty should be removed, or the major developed countries who are the proposers and beneficiaries should provide adequate commensurate concessions to the developing countries. The General Council should work out the process of providing such concession to the developing countries.

TRADE, DEBT AND FINANCE (PARA 31)

            Perhaps this subject has come in as a result of the proposals of some developing countries. The aim is to consider how trade can help solving the problem of debt of the developing countries and financing for their development. However, the chairman’s text stretches the issue to strengthening the coherence of trade, finance and monetary policies and to safeguard the multilateral trading system against financial and monetary instability.

Risks

            The main risk is that the consideration of the problem of debt and finance for development will get totally confused with the issue of coherence of trade, finance and monetary policy. Besides, the strengthening of coherence may result in strengthening the combined grip of the IMF, World Bank and WTO on the developing countries’ domestic policies.

Remedies

            The chairman’s text should be limited to the issue of considering how trade will help solving the problems of debt and financing for development of the developing countries. The stipulations regarding the coherence and safeguarding of the system should be totally removed from this text.

LEAST DEVELOPED COUNTRIES (PARA 34)

            This para does not have any thing specific as direct benefit to the LDC’s in the WTO system. It has several external elements mentioned in it.

Remedies

            The text should include specific elements of special benefit to the LDC’s in the WTO system.

ASSESSMENT PART (PARAS 1-9)

            The assessment part is totally unbalanced. It presents a picture that the GATT/WTO system has brought about benefits to the countries all around. It is now well known that the major beneficiaries have been the developed countries. A large number of the developing countries have not benefited from it. Also the benefits have not been fairly and equitably distributed. Besides, the developing countries have brought out forcefully the inherent inequities and imbalances in the system and in specific agreements. The chairman’s text in these paragraphs has totally ignored all this.

Risks

            If the Ministerial Conference comes out with such self-congratulatory and one-sided assessment, the problems will continue to be there and will get aggravated in intensity.

Remedies

            In fact there is no need to have such a long assessment portion which is in the nature of a preambular part. It does not add or subtract from the grossly unbalanced work programme which is presented in the chairman’s text. Best alternative is to delete all these paragraphs. However, if it is considered that the assessment must be included, each of these paragraphs must be balanced by additional elements to incorporate the limitations of the trading system as such and particularly the imbalances, inequities and unfair distribution of gains.

IMPORTANT MISSING SUBJECT

            The question of inadequacy and inappropriateness of the decision making process in the WTO negotiations has been brought out by the developing countries for a long time. They have complained that agreements are arrived at and they add to their obligations in the system without their participation and, sometimes, even without their presence. This issue has been particularly brought to the focus in the Singapore Ministerial Conference and Seattle Ministerial Conference. It was thought for some time after the Seattle Meeting that this issue would receive special attention. It is surprising that the chairman’s text has completely ignored this issue.

Remedies

            The text should have an operational para indicating that the Ministerial Conference recognizes this problem, expresses determination to handle it with urgency and, towards this end, establishes a machinery for finding out solutions within a specified time.

URGENT NEED FOR ACTION

            It is important for the developing countries to work on improving the chairman’s text. The text as envisaged at present prescribes a wide ranging activities in the WTO which will particularly serve the interest of the major developed countries. If prompt action is not taken at this stage, the developing countries will continue to suffer from the inequities of the system for a long time in future. The right opportunity is now, when the text is still in the formative stage. Indifference at this critical stage will prove to be very costly for the developing countries.

           

               

                       

                                                                                                                           

             

 


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