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CHAIRMAN’S REVISED TEXT AND DEVELOPING COUNTRIES

(by Bhagirath Lal Das)                                   

30.10.2001

OVERALL NATURE OF DRAFT DECLARATION

The revised Draft Ministerial Declaration brought out by the Chairman of the General Council (henceforth called ‘the chairman’s revised text’ in this paper) on 27 October accommodates almost fully the agenda of the major developed countries, but it does not take into account the interests of the developing countries. It is a definitive expression of what the Ministerial Conference 2001 is expected to consider and perhaps adopt. There are no alternatives to various specific proposals and there is no indication that there are differences among the Members on many proposals in the text. Such texts without alternative formulations or brackets are generally presented by the chairmen when the differences among the Members have been patched up. This is far from the position in the present case.

This is a revision of the first text presented by the Chairman on 26 September. Informal sessions of the General Council were held to consider that first text. A large number of the developing countries opposed various specific proposals of the text. The whole group of the Least Developed Countries and about a dozen of the other developing countries specifically opposed the proposals about negotiations on Singapore issues, i.e., investment, competition policy, transparency in government procurement and trade facilitation. They also clearly opposed the provisions on Organisation and Management of the Work Programme which had signalled the launch of a new round in the WTO. Then there were opposition from a large number of developing countries to the negotiation on non-agricultural products. There was opposition from several developing countries to a number of other provisions.

It was expected that the Chairman would take into account all this while revising the text. But he has ignored all these statements of the developing countries. Considering that there are serious differences on several paragraphs, the revised text is not a truthful representation of the situation and it also gives a wrong impression that the differences have been patched up.

The following sections discuss the areas where there are severe problems in the revised text and give some suggestions for an alternative approach.

A ROUND WITHOUT A NAME (PARAS 38-45)

The revised text launches a new round of negotiations in the WTO, without mentioning the word “round”. It is contained in the section “Organisation and management of the work programme” in paragraphs 38-45. 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 38).

(ii)  A special session of the Ministerial Conference, and not a regular periodic Ministerial Conference, will consider the results of the negotiations. (para 38)

(iii) A Trade Negotiating Committee will be formed to supervise the overall conduct of the negotiations.(para 39)

(iv) There is a special provision about who would participate in these negotiations. (para 41) In a normal WTO negotiation, it is presumed that the Members of the WTO will participate in the work.

Risks

There is grave risk in starting a new “round” even with a shorter and limited agenda than what is included in the revised text. The harmful consequences for the developing countries are the following.

(i)   The “round” is proposed to include the new issues, like investment, competition policy, transparency in government procurement and trade facilitation. There is also an indication of negotiation in the area of environment. It will be extremely dangerous for the developing countries as they are likely to lose their options for development in these negotiations. The dangers in these new areas will be explained further while discussing these specific subjects in later sections. Even if the “round” is started on limited number of issues, it is not safe. 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 even if the agenda is limited in the beginning, it should not give us any comfort that the new issues will not come in later. 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.

(ii)  The revised text says that the negotiations “shall be conducted with a view to.....achieving an overall balance in the outcome of the negotiations”. (para 42); which means that there will be balance in the results of the 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.

(iii) 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”.

(iv) 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.

The provision that the principles of special and differential treatment for the developing countries should be taken into account in the proposed negotiations (para 43) does not improve the situation at all. It is as usual in the nature of the best endeavour clause, and such references in the past, particularly in the Uruguay Round, have not brought significant benefits to the developing countries.

Remedies

New subjects should not be added on to the WTO; and for conducting negotiations in the existing subjects, 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 Conference. Thus what should be done in the interest of the developing countries is the following.

(i)   Paragraphs 38 to 45 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 12)

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-related issues and concerns raised by Members and are determined to find appropriate solutions to them” appears more rhetorical than providing any substantial benefit to the developing countries. The issues have been covered by a separate paper “Decision on Implementation-Related Issues and Concerns”.

The only clear decisions of specific and implementable nature in this paper on implementation 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. For the Agreement on Technical Barrier to Trade also the “reasonable interval” has been put as not 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. If the GNP reaches this level, the country does not have this benefit. The revised text 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. (The Chairman’s first text had provided that a country would continue to be in this list until its GNP per capita per annum reached US$ 1000 at 1990 prices for three consecutive years. This beneficial provison does not appear in the revised text.)

(iv) In textiles, “growth-on-growth” quota levels has been provided. 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.

All other decisions in this paper are in the nature of “urging or requesting the Members”, “reaffirming some earlier position”, “taking note of some action”, “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.

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 12 of the revised text that the Ministers “attach the utmost importance to the implementation-related issues and concerns...and are determined to find appropriate solutions to 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 there is an attempt to split the manner of treatment of the Implementation issues. (Para 12) In respect of the Implementation issues falling in the areas where negotiations are to being mandated, these issues will be “addressed under that mandate”. It is a dangerous stipulation, as the treatment of these issues may in that case get mixed up with the new negotiations in those areas. There is a risk of further concessions being demanded from the developing countries for solving the Implementation issues.

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, if a new “round” with new issues is launched.

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 on a faster track than the other issues included in Work Programme. The time-target for completion of the work on the implementation issues should be very much earlier than that for the other parts of the 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 (PARA 20)

Chairman’s first text had two alternatives, viz., one, starting negotiation and two, continuing with the study process. The revised text has removed the second alternative. Thus the only option in the revised text is to have negotiation in this area. In the initial stage, the revised text calls for focussing the work on clarification of elements of a possible multilateral framework in this area, including the negotiation modalities. Then in the fifth Ministerial Conference, a decision will be taken on the modalities of negotiation. The elements for clarification have been listed in detail.

The elaborate and complex language in this paragraph does not hide the clear content that it aims at starting the negotiation in this area. Some elements 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.

A large number of developing countries, including the group of the Least Developed Countries and nearly a dozen others had strongly and unambiguously opposed the start of negotiation, when the first text had been taken up for consideration in the informal meeting of the General Council. As mentioned in the beginning, the Chairman has ignored all that. He has not only retained the proposal of negotiation in this area, but he has simultaneously removed the other alternative, i.e., that of continuing the study process. It is a very unusual and strange step. The only alternative left now is the start of negotiation in this area.

The revised text mentions “cross border investment, particularly foreign direct investment”, which means that it aims at including investments of types other than the foreign direct investment.

Besides, among the elements listed in the revised text, there is nothing on the obligation of the investors and the obligation of the home country of the investor. These elements are very relevant.

Risks

There is grave risk for the developing countries if this proposal in para 20 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 will put serious constraint on their policy options for development. At the same time, it is not likely to give them any benefit, as a multilateral agreement will not add to foreign investment in their countries.

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, many aspects of macroeconomic policy, labour policy, and even  social policies may not remain far behind. All this will be extremely dangerous for the developing countries.

Remedies

The proposal contained in paragraph 20 has to be removed altogether. It will be extremely risky for the developing countries to let negotiation on investment start in the WTO in any form.

To make the proposal more acceptable to the developing countries, the idea of negotiation has been brought forth in recent consultations in many forms. Some times it is proposed that there should be plurilateral agreement in this area, meaning thereby that only those countries that are willing need join the agreement. Then a complex alternative was being discussed recently, i.e., an “opt-in-opt-out” approach, which meant that a country could decide to join the negotiation or to leave it; and even if it joined the negotiation, it could opt out of the agreement when it was finalised. There is still a possibility that these alternatives may be floated at the Ministerial Conference as compromise formulations. But all these variations will be dangerous. The countries which opt out will find it difficult to remain out for a long time. The financiers of the developed countries will start charging higher interest rates on lending for investment into the countries that have opted out. It will make the investment in these countries more costly which will naturally depress the flow of investment into those countries.

Any formulation which implies, directly or indirectly, that this subject will be considered for negotiation should be totally rejected. It should be remembered that the Singapore Ministerial Meeting in 1996 had taken a solemn decision that any negotiation in this area should be started only with the explicit consensus of the Members; and a large number of the developing countries are opposed to it.

COMPETITION POLICY ( PARA 21)

Here again there were two alternatives in Chairman’s first text: one, to start negotiations on competition policy, and two, to continue with the study process already going on in the WTO. In the revised text, the second alternative has been deleted. As in case of investment, the long and complex text in this paragraph does not hide the fact that it is a clear proposal for starting negotiation in this area. Again as in case of investment, a large number of the developing countries had strongly and clearly opposed the proposal for negotiation during the informal meeting of the General Council. But the Chairman has ignored all that. He has not only continued with the proposal of negotiation, he has also removed the alternative option of continuing the study process.

The revised text lists out elements for clarification. But many 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, etc.

Risks

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 proposal contained in para 21 should be totally rejected. Here again, some compromise formulations may emerge later as has been explained above in case of investment. Any alternative idea of plurilateral approach or “opt-in-opt-out” approach should not bring any comfort to the developing countries, for reasons similar to those explained in case of investment. There is a slight difference with investment, as competition is not outside the purview of international trade. But that is no reason to start negotiation in the area of competition, when there are severe risks for the developing countries and a large number of them are opposed to starting negotiation at this stage. The study process has not been completed; and a large number of the developing countries feel that it is premature to start negotiation at present. It should be remembered that the Singapore Ministerial Conference had taken a solemn decision in 1996 that any negotiation in this area would be started only with the explicit consensus of the Members.

TRANSPARENCY IN GOVERNMENT PROCUREMENT, TRADE FACILITATION

(PARA 22-23)

These two subjects coming on from Singapore Ministerial Conference have been placed in the chairman’s text as subjects for starting negotiations. The decision in the Singapore Ministerial Conference was that negotiations will be started in these areas only when there is explicit consensus of the Members. Many developing countries have been expressing strong opinion against starting negotiations in these areas at present.

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. The formulation in the chairman’s text regarding the negotiation being limited to transparency can hardly give much comfort in this background of the statements and actions of the major developed countries.

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.

AGRICULTURE (PARA 13)

This paragraph contains some objectives for the negotiations in agriculture. The text has selectively taken some portions from the Preamble of the Agreement on Agriculture (AOA) and has left out some important parts. This selective approach has distorted the relevant stipulation in the Preamble. Further, the text contains some words which are risky. Different proposals have been placed close to each other in this paragraph. In the discussion below, references have been made to specific sentences of the paragraph for the sake of clarity.

Risks and remedies

I.    The second sentence, starting with “ We recall...” is derived from the second paragraph of the Preamble to the AOA, but the word “through” in this sentence disturbs the content of the Preamble. The Preamble says that the long term objective “is to establish a fair and market oriented agricultural trading system and that a reform process should be initiated...” (emphasis added). Thus the reform process has not been expressed as the sole means of achieving the objective. But the Chairman’s text, by using the word “through” tries to do that. The Preamble is a carefully negotiated text; hence it will be advisable to stick to the text.

The word “through” should be changed to “and”, and later portion of the sentence should be suitably modified.

II.The developing countries have been repeatedly emphasizing the importance of agriculture in their economies; and it is important to recognize it in this part of the beginning of the paragraph which mentions the long term objective.

The following should be added after the third sentence, i.e., after the sentence “We reconfirm...”:

“We recognize the particular importance of agriculture in the economies of the developing countries, specially in respect of food production for domestic consumption (commonly referred to as food security) and rural employment.”

(Though food security and rural development have been included in the operative part of the text later, it is important to mention it here too,  so as to be an integral part of  the guiding principles of the negotiations.)

III. The fourth sentence, beginning with “Building on the work ...”, specifies the subjects of negotiations. The first subject is: “substantial improvement in market access”. But it leaves out an important qualification on market access which is there in the preambular paragraph 5 of the AOA, i.e.:  “the developed country Members would take fully into account the particular needs and conditions of developing country Members by providing for a greater improvement of opportunities and terms of access for agricultural products of particular interest to these Members...”. Thus the text becomes unbalanced in as much as it misses an important qualification to the market access objective.

This qualification is an integral part of the process of improvement of market access. It is proper and necessary to include it in the text after the fourth sentence. [The problem is that by picking out some portions from important earlier decisions and leaving out some significant qualifier has the risk of the qualifier being slowly forgotten. Hence, it is necessary to include the qualifier here. The formulation in the fifth sentence on special and differential treatment is not adequate to cover this element.]

IV. The next subject of negotiation given in fourth sentence is: export subsidies. It has a relation with the fourth preambular para of AOA, which speaks of commitments in “export competition”. Export subsidy is a part of export competition, but export competition has several other aspects, e.g., monopoly, cartelisation in agricultural trade, export credit, etc., as has been brought out in several recent studies. Thus limiting the negotiation only to reduction and phasing out of export subsidy limits the scope significantly.

Hence, it is important to add into this subject: “and consideration of other elements of export competition”.

V.  The next subject of negotiation mentioned in the fourth sentence is: domestic support. The text aims at “substantial reduction in trade distorting domestic support”. This formulation is dangerous. It prejudges severe differences on the perception of the effects of domestic support. By restricting the negotiation to the reduction of “trade distorting” support, it gives immunity to the so called “green box” subsidies of the major developed countries. The developing countries have laboriously brought these subsidies of the major developed countries into focus for the past two-three years; and now this formulation of the chairman’s text may take it away from the table.

It is important to drop the words “trade distorting” in this subject in the fourth sentence. (If it is not dropped, the developing countries are in the danger of losing the opportunity of raising the question of so called “green box” subsidies of the major developed countries during the negotiations.)

VI. The negotiations on market access, export subsidy and domestic support are integrally linked to one another in the sense that the impact of the market access commitments are very much linked to the commitments in the other two areas. The negotiations in these areas should not be carried out in separate compartments. It is important to include in the text after the fourth sentence that: “The negotiations in these areas will be carried on in integrated manner.”

VII.      The fifth sentence which is on special and differential treatment to the developing countries is not clear on the manner in which the development needs, including food security and rural development, will be taken into account. It should be clearly stated that: “The developing countries shall have the flexibility to take lesser commitments in these areas in view of their development needs, including food security and rural development”. 

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, regional arrangement and dispute settlement. In respect of the areas of subsidy and anti-dumping it is said in the revised text that the negotiations will be conducted “while preserving the basic concepts and principles underlying” the respective agreements. This qualification has been introduced in the revised text; it was not there in Chairman’s first text. Besides, the negotiation on dispute settlement is to end by May 2003, though no such time frame has been set for the other areas of rules.

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.

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 qualification in para 24, i.e., “while preserving the basic concepts and principles underlying them” should be deleted.

(iii) The time frame mentioned in para 26 should be removed.

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 15 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 16)

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. Chairman’s first text mentioned about “less than full” reciprocity expectation from the developing countries. This qualification has been removed from the revised text. While discussing chairman’s first text, the developing countries had said that “less than full” reciprocity was vague and they had asked for greater clarity. In stead of clarifying or improving on it, the revised text just drops it.

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.

A large number of the developing countries have given a specific proposal to start a study process for assessing the impact of tariff reduction by the developing countries on their development process. This proposal has been ignored in the revised text.

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.

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 17-19)

The chairman’s text says that the procedure for geographical indication in case of wines and spirits will be finalized. In respect of the geographical indications for other products, the revised text notes that it will be considered by the TRIPS Council in course of handling the implementation issues. 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 revised text refers to an attached declaration on this subject. 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. (vi) the draft declaration about public health is very weak; it should be strengthened substantially.

ENVIRONMENT (PARA 27)

The chairman’s text instructs the Committee on Trade and Environment (CTE) to pursue its work and in particular it identifies four items for special attention. These are: the effect of environmental measures on market access, the relationship between the multilateral trading system and multilateral environment agreement, the relevant provisions of TRIPS agreement and labelling. It goes on to add that “work on these issues should include the identification of any need to clarify relevant WTO rules. Further, in the future action at the time of the fifth Ministerial Conference, an option of negotiations in these areas has been indicated.

Risk

The specific mention of clarification of the WTO rules in this context is dangerous and it is catering to the agenda of some major developed countries. It has the risk of diluting the WTO discipline on market access for professed environmental reasons. Besides, referring to a possibility of negotiation is very much premature. The points often raised by the developing countries about the role of the expansion of their market access in their upgradation of environmental standards has not been taken into account. The priority attention given to labelling is likely to result in constraining the exports from the developing countries in the markets of the developed countries, as indicated by the discussions on this subject in the WTO in the past.

Remedies

It is important to remove the reference to the clarification of WTO rules. It is also necessary to remove the reference to the option of negotiation. Besides, labelling should not be given a prominent position as has been given here. The consideration of the role of the expansion of developing countries’ market access in enhancement of their ability to adopt higher environmental standards should be included as a priority item.

ELECTRONIC COMMERCE (PARA 28)

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 concessionsto the developing countries.

TRADE, DEBT AND FINANCE (PARA 30)

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 (PARAS 35-36)

These paras, though long, do not have any thing specific and enforceable 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 and enforceable elements of special benefit to the LDC’s in the WTO system.

ASSESSMENT PART (PARAS 1-11)

Though there has been some changes form the chairman’s first text, the assessment part is still 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, it 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 except a brief mention in the preambular part in para 10. No concrete action has been suggested in the operative part. The risk is that the developing countries will continue to remain marginalised in the decision making process of the WTO.

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

The revised text is highly unbalanced and dangerous from the angle of the developing countries. In fact it is much worse than chairman’s first text. If it forms the basis for the consideration of the Ministerial Conference, the developing countries will be put to tremendous disadvantage. Already their experience with the operation of the WTO agreements has not been happy. If the agenda as included in the revised text, which in fact is the full agenda of the major developed countries, without taking into account the interests of the developing countries, gets approved in the Ministerial Conference, there will be grave and irreparable damage to the developing countries.

Accordingly, it is not in the interest of the developing countries to let this revised text in the current form be transmitted to the Ministerial Conference. Either the text should be substantially changed or it should have alternatives in controversial paragraphs and portions.

           

           

                       

                                                                                                                            

             

 

 


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