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WTO facing crisis of legitimacy, needs institutional reforms

by Tetteh Hormeku

Geneva, July 2001 - The World Trade Organization is currently facing a crisis of legitimacy, and the urgent question of the institutional reform of the WTO must be understood in this context. All over the world, and especially since Seattle, social movements and citizens groups have come to regard the WTO and its rules as contributing to poverty, the destruction of the environment, as being a tool in the hands of the TNCs, and for taking away the sovereignty of countries and the independence of local communities.

The crisis of legitimacy is a result of two factors: the untransparent and undemocratic working methods and system of decision making of the WTO; and the imbalances and inequities in the existing agreements of the WTO, both of which operate in favour developed countries, and against the vast majority of the members of the WTO.

Any attempt to address this crisis of legitimacy, through institutional measures, can not be successful unless these two problems are addressed simultaneously.

The WTO has been and remains probably the most untransparent and undemocratic among international institutions. This remains so, despite moves in recent times by the WTO to increase the WTO’s interaction with the public, media, and citizens groups. At the heart of this non-transparent character of the WTO are its undemocratic working methods and systems of decision making.

In terms of formal arrangements, decisions of the WTO are made on the basis one country one vote and by consensus, thus giving the WTO the appearance of an organisation whose decision making is democratic. Decisions are taking by the General Council or in subsidiary bodies. Major decisions are also made or endorsed by the WTO Ministers meeting at the Ministerial Conference.

In practice, most, if not all the key decisions of the WTO are worked out in informal meetings. In many cases, only a few countries are invited to these meetings. Where these meetings take place, when, who attend these meetings, as well as the positions taken by various countries are not made known. When these small informal groups work out decisions among themselves, then these are taken before the formal meetings, and then made into decisions.

The real effect is that the WTO has been dominated by a few major industrial countries, the Quad (Canada, the EC, Japan and the US). Often these countries negotiate and decide among themselves, and then embark on an exercise of winning over ( often through intense pressure) a selected number of the more important of influential developing countries, in the informal meetings.

The system of decision making by consensus in also odd in its implementation. On issues where the a majority of developing countries, who form the vast majority of the overall WTO membership may agree, it is said that there is no consensus should even a few developed countries disagree with the majority, and the issue is practically killed, or have no chance of being successfully dealt with.  However, should the major powers (especially the US, Japan, the EU) agree on an issue, while a sizable number of the developing countries disagree, then the major powers embark on a process of building consensus. In reality, this means a process (sometimes prolonged) of wearing down the resistance of the outspoken developing countries until a few or even one remain outside the consensus.

The vast majority of developing countries have very little real say in the WTO system. Many lack the financial and human resources to adequately participate in the formal meetings, let alone the many informal meetings to which they are not even invited. Most of them, especially being indebted, and relying on the bilateral aid or IMF and World Bank loans, are particularly vulnerable to the pressures of the “consensus building” processes.

Examples of these include the way in which the so-called Singapore issues were introduced into the WTO at the 1996 WTO Ministerial. Prior to that ministerial, the major powers lobbied hard for the issues of investment, competition, and procurement to be included in the agenda of trade negotiations after Singapore.  Most developing countries opposed this and there was no consensus. But on arriving in Singapore they were confronted by a draft declaration which included these issues. After much informal consultations which went on behind the back of most delegates, the final declaration included these issues. Another example is the election of the current Director-General, a case too familiar to bear repetition.

The now familiar debacle of Seattle was due to the refusal of developing countries to tolerate their continued exclusion from decision-making as the result of the use of green room processes. After the debacle of Seattle, everybody would have thought that the WTO would have learnt a lesson. The experience of African countries in Libreville proved the optimists wrong.

African ministers were invited for capacity building seminar organised by the WTO secretariat in Gabon, only to be confronted with the draft of declaration meant to signal their agreement to a new round Only after much struggle was this attempt at manipulation defeated. But even today we heard from the Chair of the opening session to this symposium statements which purport to imply that African ministers had agreed to a new round at the Gabon workshop.

[In subsequent interventions and comments at the session of the symposium where the paper was presented, a delegate from Egypt corroborated Mr. Hormeku’s charges, and noted that while the ministers and their officials at Libreville had negotiated and agreed on a text, the text issued by the WTO secretariat at Geneva subsequently contained some phrases and words that had been deleted by the ministers at Libreville.]

To complicate this system is the role of the WTO Secretariat, and especially the role of the Director -General.

The WTO secretariat and the Director-General were established on the understanding by members of the WTO that these will service members equally, and the secretariat and the DG would have no independent role as the secretariats of other international organizations, but do only what the membership asks it to do.

The Director-General in particular, has neutral role, in discussions of issues among members, and has no power to intervene in a debate among members with its own views and positions, however considered.

And yet over the life time of the WTO, the office of the Director-General has acted in the exact opposite way. In the preparations towards Seattle, and since then, members of the WTO are sharply divided on the introduction of new issues on the agenda for negotiations in the WTO. While a few powerful countries like the EU, the US and Japan want rules on issues like investment, competition, and government procurement to be adopted in the WTO, the vast majority of developing countries have been explicit in their opposition to these issues being negotiated in the WTO.

In this context, one would have expected the WTO secretariat and the Director-General ideally, to facilitate the expression of both sides of the debate. On the contrary, what we see is an active public and private campaign by the Director-General to promote the view of the major powers who want the new issues. This has included declarations on public platforms by the D-G in support of these issues and private communications and letters to trade ministers in capitals.

What we have then is a system of decision-making in the WTO in which formal democracy is actively undermined by the processes in which the major powers, with the active participation of a supposedly neutral secretariat, impose their will on the majority of the members. This is at the heart of the institutional crisis of legitimacy currently being suffered by the WTO.

It is thus clear that the main motivation of this undemocratic system is the drive by the major countries to maintain and adopt WTO agreements and rules which favour their transnational corporations, which have already caused damage, and threaten to cause further damage, to the economic and developmental interests of the majority of the world’s people.

Developing country governments, as well as civil society groups all over the world, have expressed concern over the effects of the existing agreements on their economies, societies and the environment.

There is a widespread common agreement that there are imbalances and inequities in the existing agreements such as Agriculture, TRIPS, GATS, TRIMS, to name but a few. Developing country governments, supported by large numbers of citizens groups have asked for these imbalances and inequities to be addressed, and the agreements revised in order to prevent further damage.

These have all been effectively ignored by the major countries which dominate the WTO system and its decision-making process. Instead, these powers continue to push for even more freedom for their transnational corporations over the developmental, social and environmental concerns, through the adoption of new rules in areas such as investment, and for the launch of a new round of negotiations with these issues.

In view of the fact that the effects of the existing agreements are actually being experienced in the form of more and more misery in the life of the world’s majority, then ignoring the call for revision and repair of these agreements and pushing for even further liberalisation, would only confirm for the world’s majority their view of the WTO as an instrument to undermine peoples livelihoods in the name of corporate profit. These problems of the WTO system are not new.

By the same token demands and concrete suggestions have been made by concerned groups from civil society and social movements as well official circles to address these problems. Most of these have effectively been ignored. In March 1999, the Third World Network issues a statement at a symposium similar to the current one, organised by the WTO. The elements of that statement, which are shared by many groups the world over, remain valid today. It stated, among others, that, “An improvement in the working methods and systems of the WTO will at least entail the following:

(a)  the processes of consultations, discussions, negotiations and decision-making in the WTO would have to be made truly transparent, open, participatory and democratic;

(b)  any proposals for changes to the rules, or new agreements, or new commitments on countries should be known in their draft form to the public at least six months in advance before decisions are taken, so that in each country civil society have a full opportunity to study them and influence their parliaments and governments and the stand they should take on these issues;

(c)  the discussions and negotiations that are being planned and are taking place at the WTO must be made known, and all members must be allowed to be present and participate. The practice of small informal groups making decisions on behalf of the all members must be stopped. To take into account the lack of human and financial resources of developing countries, there should not be more than one or at most two meetings taking place at the same time;

(d)  Parliaments and parliamentarians should be kept constantly informed of proposals and developments at the WTO, and they should have the right to make policy choices regarding the proposals arising in the WTO that have an effect on national policies and practices;

(e)  civil society should be given genuine opportunities to know the issues that are being discussed and the status of the discussion groups in the various committees and on the various issues. Civil society groups and institutions must be given genuine opportunities to express their views on and to influence the outcomes of policies and decisions. The issues and options being discussed in the WTO must be presented to the public in all WTO member countries and subjected to public debate and scrutiny. The view of civil society groups should be actively sought by member states. “

As stated, these demands have been made time and again by many people, including civil society groups and official bodies. Very little progress have been made on this front. And yet these institutional matters are critical to the debates about how to proceed with the existing agreements in the WTO, as well as on the issues of further rules being adopted. Given the clear lack of participation which the current system entails, introducing new agreements in the WTO - especially in areas like investment, government procurement and competition policy, will clearly exacerbate the imbalances of the multilateral system. This is even more reason to support the demand by developing countries to focus the coming meetings of WTO on issues of inequity, imbalances and problems of implementation arising from the current agreements.

Finally, if attempts by the WTO to interact with the public, as for example through this symposium, is to have a meaning other than a public relations exercise to win over people to the liberalisation agenda of the major industrial countries and their transnational corporations, then the secretariat, and especially the Director-General must stop its active and biased campaigning for new round and new issues against the wishes of the developing countries which after all are in the majority of the WTO membership which the secretariat is established to serve.

[* Tetteh Hormeku is the trade coordinator of the Third World Network Africa Secretariat. The above is based on a paper presented by him at a symposium for non-governmental organizations at the WTO on 6-7 July.) – SUNS4936

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