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North-South divide at WTO General Council meeting


A Special Session of the WTO General Council which launched
the preparatory process for the next WTO Ministerial in 1999,
produced a division of opinion among the countries of the
North and the South. While some North countries pushed for a
comprehensive round of negotiations that would include new
issues, the countries of the South asserted that priority
should be accorded to implementation issues and the built-in
agenda instead.


by Chakravarthi Raghavan



GENEVA: Trade negotiators laid out on 24 September, at the
Special Session of the WTO General Council which launched a
preparatory process for the next Ministerial meeting, their
initial positions on further trade talks at the WTO, and agreed
on a schedule of meetings and on a work programme on electronic
commerce.
The Special Council meeting, which had on its agenda the
fixing of the date of the next Ministerial meeting (to be
hosted by the US), was unable to do so. Egypt withheld its
consensus, as the WTO spokesman put it, to check whether the
dates proposed by the US (30 November-3 December 1999) clashed
with other meetings, and there will be further consultations.
However, other participants said, Egypt took note of the
proposed dates, but pointed out that Ministerial meetings are
to be held every two years, and hence that the next should be
held in 2000. If the dates were aimed at accelerating the
process and pushing for comprehensive multilateral trade
negotiations as a single undertaking, the General Council has
not agreed to it. If it was something else, Egypt would still
need to check whether the dates conflict with other
international meetings.
The WTO press office briefed the media on points made by
delegations, and made available copies of statements made by
the EC and the US, but not those of other delegations.
In initial presentations, the EC and Japan laid out their
demands for "comprehensive" talks, including on new issues
identified for study at Singapore (investment, competition
policy and trade facilitation). Developing countries underlined
their priority towards implementation issues and the built-in
agenda, and declined to consider or take any decisions on new
issues until the working parties mandated at Singapore to study
these issues have reported to the General Council at the end of
this year, and the General Council can adopt a decision or
recommendation on a further course of action.
The US itself kept its options open, and did not commit
itself either way, but insisted on the negotiations already
mandated - on agriculture and the next round of services
negotiations - starting on time.
The Special Council meeting had been mandated by the 2nd
Ministerial meeting to set up a process to identify and make
recommendations to the next Ministerial on a work programme of
further liberalization, sufficiently broad-based to respond to
the interests of all members.
A number of countries that spoke on 24 September also
supported the idea of the new negotiations being treated as a
"single undertaking" - forcing countries to accept or reject
the package - and a time frame of 3-4 years for the conclusion
of the negotiations after their initiation.
India, ASEAN, Egypt for Africa and for itself, and other
developing countries referred to a number of accords of the
Uruguay Round, where the promised benefits or balance has not
accrued to developing countries, and which need to be
addressed, in the preparatory process, from the perspective of
special and differential treatment.
Egypt, for Africa, and several other developing countries
also questioned the thesis (of the WTO head, the EC and other
industrial countries) that solutions to the problems of
developing countries hit by the financial crisis lay in those
countries "further liberalizing" access to their own markets.

Comprehensive negotiations


The EC called for comprehensive negotiations for the new
millennium, with an agenda reflecting the interests of all
countries. A sectoral focus, as in the case of the information
technology agreement, serves the interests of only a few
countries and would not work, it argued.
The EC set out as "illustrative" its wish list - services;
further negotiations on agriculture, as required in Art. 20 of
the Agreement, for fundamental reforms and "non-trade
concerns"; substantial further reduction of industrial tariffs;
"traditional" issues for rule-making, including the Sanitary
and Phytosanitary Measures agreement, Technical Barriers to
Trade, and new issues like competition policy, comprehensive
framework of international investment rules and trade
facilitation; trade and environment; government procurement;
Trade-Related Aspects of Intellectual Property Righs (TRIPs) to
ensure the accord keeps up with new technological developments;
electronic commerce; and other additional issues that members
might raise as the work programme developed.
Australia called for negotiations on issues already
mandated, agriculture and services, as also industrial tariffs.
It supported a single-undertaking approach to the comprehensive
negotiations, but called for an "early harvest" in agriculture.
A separate Cairns Goup statement distributed called for an
end to the export subsidies and competition in agriculture
being indulged in by some of the major trading partners
(including the US and the EC).
The US said that while several members seemed to have
answers for what the preparatory process should recommend to
ministers, the US would be unable to do so until it was able to
complete over the next several months its consultations with
industry and Congress. But they could not afford to take the
seven years it took for the Uruguay Round, and ways must be
found "to tear down barriers" without waiting for problems on
every issue and sector to be resolved. However, the preparatory
process must spend adequate time at the beginning to address
the important issue of implementation and the launch in time of
negotiations already mandated. As for new issues, arising from
the Singapore work programme, these have to be carefully
considered, and collective consideration could begin only after
the end-of-the-year reports from the working groups.
The Czech Republic, speaking for the Central European
countries, emphasized both implementation and future work (new
issues), and supported a comprehensive round of negotiations,
including on investment and competition.
Japan also supported a "comprehensive series of talks", and
mentioned in particular: full and faithful implementation of
existing agreements, including obligations undertaken by
developing countries on TRIPs, Trade-Related Investment
Measures (TRIMs) agreement (which calls for review before five
years), a sufficiently broad-based further liberalization
process with comprehensive negotiations including on industrial
tariffs, investment rules and other new areas in addition to
agriculture and services.
Korea called for comprehensive negotiations to reflect a
balance of interests, including all issues "mature enough" to
be negotiated - the built-in agenda, market access for
industrial products, investment, competition policy,
transparency in government procurement and regional trade
accords.
Chile supported the view for a three-year time span for the
negotiations, and for the inclusion of, apart from agriculture
and services, investment issues and, if there was a consensus,
competition-policy questions.

Priority to implementation issues


Brazil stressed the importance of the single-undertaking
concept for the negotiations, delineating these from the
financial services and telecommunications accords, which had
been mandated as part of the Uruguay Round. Agricultural and
services issues, part of the built-in agenda, should not be
seen as individual sectoral talks.
India, in what the WTO spokesman described as a lengthy
statement (the text later made available by the delegation
showed it was slightly shorter than the EC statement
distributed by the WTO press office), provided the details of
a number of agreements involving deficiencies and failures to
implement the special and differential treatment provisions
favouring the developing countries, and needing remedies.
Several developing countries that spoke later supported this
stand.
India insisted that before moving on to other issues
identified in the Geneva Ministerial Declaration, the
preparatory process should give priority to issues of
implementation of existing agreements, and concentrate on the
three sub-indents of para 9 of the Declaration. While some
aspects of the preparatory process could be delegated to the
relevant subsidiary bodies, implementation issues requiring
political sensitivity should be addressed at the General
Council. Of crucial importance was the element of special and
differential treatment (S & D) in the WTO accords - time-
limited derogations for longer transition periods and greater
flexibility for certain obligations, and others for specific,
but undefined, actions by developed countries under certain
agreements while dealing with developing countries.
On the time-limited derogations, the preparatory process
should evaluate the experience of developing countries over
past years, and determine whether the intentions of negotiators
have been effectively translated into practice. In cases like
that of the Textiles and Clothing agreement, there has been
implementation in letter, but without achieving meaningful
market access for developing countries. The second category of
S & D was in the nature of "best endeavour" clauses, and had
been virtually ignored in implementation.
India cited in this regard the GATT balance-of-payment (BOP)
provisions (Art. XVIII:B) enabling quantitative restrictions
(QRs) by developing countries for BOP reasons, and which were
different from Art. XII provisions (applicable to industrial
countries), specifically requiring assessment of adequacy of
foreign exchange reserves, taking into account the long-term
development needs of a developing country. But in actual
practice (with the IMF providing both data and a judgement on
adequacy), both Art. XVIII:B and Art. XII were being treated
similarly. Similarly, despite the special provisions in Art. 15
of the Anti-Dumping agreement, instead of special consideration
being given before taking action, the special consideration had
become one of targeting developing countries with repeated
proceedings on the same commodity. In the same vein, the
special provisions of Art. 10 of the Sanitary and Phytosanitary
(SPS) accord and Art. XII of the Technical Barriers to Trade
(TBT) agreement have hardly ever been honoured in
implementation, leading to the imposition of standards by
developed countries beyond the technical competence of
developing countries and without regard to their special
development, financial and trade needs.
Again, such lack of understanding of the problems of
developing countries could be seen in the Agreement on
Subsidies and Countervailing Duties, which viewed as "non-
actionable" subsidies used by the developed countries, but made
actionable those usually deployed by developing countries. And
while special dispensation was provided for low-income and
least developed countries, this was still subject to
countervailing measures, thus nullifying the benefits granted.
The General Agreement on Trade in Services (GATS), in Art.
IV and Art. XIX, called for measures to facilitate
participation of developing countries in world trade. But in
the implementation of GATS, there has been increasing pressure
on developing countries to undertake more and more market
access commitments, without adequate trade-offs in market
access to them in sectors and modes of supply of interest to
them.
The Dispute Settlement Understanding too had provisions for
special and more favourable treatment to developing countries,
but these remained largely as "best endeavour" clauses.
The Indian statement said that all these were emphasized
lest there be any expectations that developing countries
seeking solutions to their legitimate concerns in
implementation should pay a price for redressal. The concerns
of developing countries were the result of asymmetries and
imbalances in the agreements, and the "empty platitudes" of
special and differential treatment have to be reviewed to lend
substance to them.

Issues raised by India


"These should be done now, and delinked from any new
negotiations, and should not be viewed as part of any new
package, but a realistic realignment and balancing of [the]
earlier imbalanced package, so as to facilitate meaningful
involvement of developing countries in the process mandated at
the Geneva Ministerial."
On other issues, India highlighted the question of "food
security" in relation to the further negotiations on
agriculture, and said it would be "too simplistic" to suggest
that the agricultural liberalization envisaged would overcome
problems of food security for developing countries with
sizeable populations. Regimes to curb the trade-distorting
subsidies used by some WTO members, if applied rigidly to
developing countries that do not distort international trade
but provide subsidies to ensure adequate production of food and
livelihood for the poor, would cause enormous hardships.
Juxtaposed against the unacceptably high levels of subsidies of
the major trading partners, any negotiations for further
liberalization of international trade in agriculture have to
take on board food security concerns of countries like India.
Other issues raised by India included:
* Unilateral trade sanctions, investigations and trade
actions maintained or imposed by some countries under their
domestic law, contrary to their WTO obligations;
* Regional trading arrangements that were threatening global
free trade;
* Imbalances and asymmetries in the TRIPs agreement, which
provides a high degree of protection to industrial products,
but does not recognize the rights of countries of origin in the
granting of patents on products using the traditional bio-
resources of developing countries, an example being the higher
protection under Art. 23 available to wines and spirits of
export interest to developed countries, but not products of
interest to developing countries;
* Transfer of technology at fair and reasonable cost in
relation to SPS measures, TBT measures and electronic commerce;
Without access to advanced technologies at affordable costs,
developing countries would find it difficult to discharge
obligations under existing WTO agreements or participate in
high-technology-thrust areas proposed to be added to the
universe of multilateral trade disciplines.
* An "Enabling Clause" for transfer of technology should be
introduced into the WTO agenda - in terms of opening an
environmental window or asking developing countries to conform
to higher health and technical standards;
* National regulations on rules of origin threatening market
access of developing countries, particularly in textiles;
Developing countries were being pressured to liberalize
market access in areas of interest to the developed countries,
while such liberalization was being delayed in areas of
competitive advantage to developing countries - textiles,
movement of professional and skilled persons - making it
apparent that the balance of concessions promised in the
multilateral trading system has not so far been achieved.
* Fresh negotiations under the Agreement on Agriculture and
GATS should commence after 1.1.2000 as mandated;
* Future work in mandated reviews should be continued in the
designated committees concerned in accordance with an agreed
timetable, and "there is no need to prepone (advance)
consideration of these issues or prejudge them at this stage."
* The education process in the spheres of investment,
competition and transparency in government procurement, as a
result of the work programme agreed at Singapore, is continuing
and a wider and deeper understanding is necessary before it
could be concluded that multilateral negotiations are
necessary.
* In trade facilitation (also a Singapore programme),
simplification of customs documentation and procedures is being
handled by the World Customs Organization (WCO) under the Kyoto
Convention, and until this is completed, there is no scope or
likelihood of any substantial simplification by any country.
The WTO must await completion of this work in the WCO.
* Environmental concerns were being used as disguised trade
barriers and causes for unilateral actions by developed
countries to restrict market access. Considerable work has been
done in the Committee on Trade and Environment (CTE) and this
has highlighted that no commitments in the sphere of trade and
environment could be undertaken, despite the initiative of some
developed countries, unless developed countries first met their
obligations under the Bio-Diversity Convention and the Rio
Principles. Until developed countries proved the genuineness of
their intentions by engaging in commitments in the area of
international environment conventions, no weight could be given
to their professed interest in safeguarding the environment
through action limited to the trade-environment interface.

Premature


The initiatives on new issues - new round of industrial tariff
reductions, high-level initiative on trade and environment,
greater transparency in WTO functioning through greater
involvement of "stakeholders" or a comprehensive new round of
trade talks - were premature, if they were intended to carry
the voluntary participation of developing countries, India
insisted.
They were still in the process of implementing the Uruguay
Round tariff cuts, and these will be completed only in 2000.
The results of these reductions have to be assessed before
launching negotiations for new commitments. Overloading the WTO
agenda would not be productive and it would be premature to
talk of any comprehensive new round of negotiations or the
induction of non-trade issues such as labour standards on the
WTO agenda.
The implementation problems and built-in agenda should be
addressed first, and trade made an instrument to promote
development. The thrust for global free trade would be far more
fruitful if the ground realities of the world economy are fully
understood and the needs and problems of developing and least
developed countries are taken on board. It was also too early
to deal with the question of a "single undertaking", since the
Council was only in the very early stages of the work programme
given by the Geneva Ministerial.
Indonesia, on behalf of ASEAN, called for faithful
implementation and said the problems they faced in agriculture,
textiles and clothing, rules of origin, anti-dumping and
subsidies were similar to those expressed by India. The
implementation and built-in agenda issues should be given
priority.
Egypt, speaking for Africa, noted that Africa's trade share
had been falling steadily, and this was a matter of serious
concern to the region, and ought to be to the world community.
There was need for faithful implementation of S & D provisions.
Egypt had heard a number of ambitious agenda proposals, but
Africa would ask trading partners to have more realistic
expectations. On market access, the African statement noted
that products of export interest to the developed world, like
computers and computer chips, were getting duty-free treatment,
but those of export interest to developing countries faced high
tariffs and tariff escalation.
In a separate statement on its own behalf, Egypt agreed that
everyone should resist protectionism, but suggested that there
was a need to be "sensitive" when preaching further doses of
liberalization as a solution to the plight of those millions
suffering from adjustment and financial crises. There were
efforts to address labour standards at the WTO, while issues of
movement of natural persons for delivery of services were being
held up with little progress.
Uganda called for the implementation of measures to give
effect to the High-Level meeting on LDCs. (Third World Economics
No. 194, 1-15 October 1998)


Chakravarthi Raghavan is the Chief Editor of the South-North
Development Monitor (SUNS)from which the above article first appeared.

 


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