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WTO logjam, members evenly divided on investment, competition issues

by Chakravarthi Raghavan

Geneva, 10 Oct 2001 - The WTO membership is evenly divided over the question of including investment and competition issues in a new round of trade negotiations, and as a result, “there is now a situation of logjam,” trade officials said Tuesday.

This assessment came after an informal Heads of Delegation meeting, and discussions at the HOD on the paragraphs of the Harbinson draft ministerial declaration on investment and competition issues.

Hitherto, not only the EU which is the major proponent, but trade officials too, have been presenting a picture of broad and growing support among the WTO members to include these issues on the WTO agenda, and launching of negotiations in a new round - with a few countries like India, Malaysia and one or two others being singled out as the ‘hard-liners’ increasingly isolated.

However in talking to the media Tuesday, after the HOD meeting, trade officials for the first time admitted that the views at the HOD meeting showed there was no shifting of positions and that “this remains a question in which the membership is deeply divided, close to an even divide where we have a situation of logjam.”

The Harbinson draft declaration, in paras 18-21, has presented two alternatives for each of these two new issues: para 18 setting out the details for multilateral negotiations on investment, para 20 for similar set of negotiations on competition policy, para 19 and 20 for the working groups on these two subjects to undertake further focussed study and present a report to the Fifth Ministerial Conference.

The paras 36-42, ‘organization and management of the work programme’, makes the negotiations and the work programme a “new round”, without using that term, and with built-in provisions for a Trade Negotiations Committee and the 5th ministerial conference to modify, provide suitable directions and launch negotiations on these and other new issues - a creeping agenda for a comprehensive round of multilateral trade negotiations.

At the HOD meeting Tuesday, on investment issue, where the attempt was to get a formulation for negotiations, without the alternatives, trade diplomats said the usual proponents the European Union and other European countries, Korea, Japan supported negotiations on these two issues. They got the support of the United States and several of the Latin American countries, “but not as broad a support,” trade officials said later.

The opponents of any negotiations were developing countries from Asia and Africa - Malaysia, India, the Least Developed Countries and quite a few others who did not bluntly oppose it but nevertheless left little doubt that they could not support such negotiations.

These opponents, trade officials said, insisted that any multilateral rules on investment - whether it be pre-investment or post-investment rights and obligations - would impinge on ability of governments to set investment policies and tie the hands of host governments to direct investments into activities or regions according to their development needs and objectives.

On the competition question, where too the division was deep, opponents pointed out that half the WTO membership did not even have domestic competition law yet, and in any talks and negotiations on rules, these countries would be handicapped.

The EU and one or two of its supporters sought to bring (as a compromise) in the notion of a GATS-type approach (of a positive list of offers and commitments to allow investments, ‘commercial presence’ as it called in GATS, to disarm opposition), with not all governments required to make any commitments. This appears to be a variation of the ‘plurilateral agreement’ idea the had EU floated in a trial balloon last year, #SUNS 4826).

However this idea met with greater opposition, both among those willing to support investment negotiations in a new round and others opposed. Several of them cited systemic reasons of damage to the WTO and the multilateral system through such plurilateral agreements.

Brazil (who has been willing to support investment negotiations) indicated it would have problems with such an approach, and Malaysia (opposed to the investment negotiations) said any such plurilateral approach would make the MTS very shaky.

On competition, the US indicated it could support negotiations for an agreement based on core WTO principles and transparency, but keeping it out of the purview of the DSU and instead have a peer review mechanism like that of the Trade Policy Review Mechanism.

While opponents of allowing the issues to be taken up in negotiations were willing to agree to the study process being continued (without any commitment on what to do at the end, and rejecting thus the kind of ‘bridging’ concept floated in Seattle by South Africa and Egypt), Morocco said that there had been enough study, and if there was to be no negotiations, the subject should be dropped from the WTO agenda and work programme.

A number of countries were still to speak, and the HOD meeting is to continue the discussions Wednesday, and then go on to discuss the mandate for agricultural talks and the new formulations put forward by Harbinson on Monday. – SUNS4985

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

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