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Withstanding pressures for new round, a major challenge for South

by Martin Khor

Geneva, 15 March 2001 -- Withstanding pressures for a New Round of trade negotiations with new issues is one of the major challenges and priorities for developing countries at the World Trade Organisation, according to several Ambassadors from the South.

The trade ambassadors were speaking at panel sessions on “Challenges and Priorities for Developing Countries” and on the Qatar ministerial conference, at the seminar on ‘Current Developments in the WTO: Perspectives of Developing Countries’, organised by the Third World Network on 14 March.

Another priority stressed by panel speakers was the need to get some of the demands on implementation issues made by developing countries accepted and resolved before the Doha ministerial meeting.

Ambassador Halida Miljani of Indonesia said that it was important that substantial decisions be made at the WTO on implementation issues even before the 4th Ministerial Conference at Doha. Other priority issues for developing countries are the built-in agenda and the mandated reviews.

Referring to discussions at an earlier session of the seminar on the proposed new issues, Halida said that many points regarding the dangers to developing countries from these new issues were valid. Developing countries need to take a firm decision, for example, on whether investment rules should be under the purview of the WTO. She said that there were some dangers in issues such as investment and competition being brought into the WTO; and there should also be caution over the issue of transparency in government procurement.

Halida also commented that developing countries must be able to stand up to the pressures building up on the new issues and a new round, and this required greater collaboration among developing countries.

Ambassador Fayza Aboulnaga of Egypt said implementation issues were the first priority. Despite the continued efforts by developing countries, the result so far on implementation at best has been a meagre one. However, it was an important achievement for developing countries to have successfully put implementation issues at the heart of the WTO. Developed countries had acknowledged that implementation issues are real and have to be looked into, and that they are here to stay.

“We succeeded to keep the pressure on implementation issues and did not succumb to pressures to push it away or to put it in the wider context of a new round,” she said, adding that a decision on implementation had to be taken before Doha.

Fayza said that more efforts had to be made to improve internal transparency at the WTO, so that it becomes “the order of the day, and everyday”; and institutionalised in the WTO’s work, and not left to the style of individuals.

On the new issues, Fayza said the Singapore issues were being discussed in working groups. For the time being these issues should continue to be studied and are not ripe yet for negotiations. They should be kept out of Doha, and kept out of the agenda of a possible new Round. She said that some developing countries had made it clear at a recent special General Council meeting that issues not yet ripe shouldn’t be part of the 4th Ministerial agenda.

In discussions, some developed countries had told her that developing countries were using implementation issues to block a new round, and that “we are asking for the moon.” Added the Egyptian envoy: “ I countered that in Uruguay we were promised the moon but what have we got today?"

“This continuation of attacks on developing countries, this kind of attitude, will undermine the multilateral trade system and could even lead to its collapse,” she warned.

The priorities for developing countries in the WTO, she said, were to press for the resolution of implementation issues and have tangible results before Doha; ensure that only issues where there is agreement among all Members are taken to Doha; that benefits outweigh the costs in any eventual future negotiations (be it a Round or otherwise); and to continue to work in solidarity with the poor and the poorest, including overcoming attempts to divide developing countries.

She added that pressures were being put on developing countries, “but we should not take on more commitments that we cannot digest.”

Ambassador Ransford Smith of Jamaica said that Ministerial meetings should assess the state of world trade. “We do not see a new round as a priority,” he said, countering arguments put forward that a new Round is needed at bad times as well as good times.

Smith, who often reflects the views within the Caribbean, said: “We don’t believe a comprehensive Round could be a desirable development."

“We are fascinated by the various strands of the argument adduced in support of or in justification for a new Round,” said Smith. “When times are good for the global economy, we are told ‘we need a new round to prevent a relapse into protectionism’; when times are bad, we are told ‘we need a new Round to counter protectionism and to lift the global economy out of the doldrums’. The question might be, when exactly will we not need a new Round?."

“In our view,” added the Jamaican ambassador, “we don’t need a new Round because a major and significant plateau in multilateral trade liberalization was attained five years ago and the commitments assumed in that Round are still being implemented by a large number of countries.... The mandated negotiations, mandated reviews, implementation issues, confidence-building initiatives (existing ones and others that can be contemplated) are important elements on which a significant amount of work exists to be accomplished."

“More importantly, we do not believe that a comprehensive negotiating Round with a slew of new issues would be a desirable development. Indeed, we only need to look at the contemplated schedule of work in the agriculture negotiating group for the remainder of this year - a possible five formal or informal meetings - to comprehend what logistical problems, apart from the substantive difficulties, a comprehensive new Round will mean for resource-strapped developing countries.”

The Jamaican envoy said in this perspective, the challenge for developing countries is to maintain the focus on mandated negotiations and implementation issues, and “confine the Ministerial preparatory process to the review and assessment role we believe is in order.” While cognizant of the right of members to introduce issues, “we should insist on the consensus principle for accepting any subject for negotiations and, given [the] recent history and limited resources of developing countries, to insist that any new negotiations contemplated are directly responsive to developing country interests, and are of limited and manageable scope.”

In the preparation for the Ministerial Conference, he said, the challenge is to ensure that the process remains transparent, that there is adequate preparation and there should be broad unity among developing countries. Any negotiations must be on the basis of consensus and should benefit developing countries.

Ambassador Boniface Chidyausiku of Zimbabwe agreed that implementation is on top of developing countries’ agenda and decisions on this must be taken before Doha. Developing countries should also assess how effective they were and could be in the mandated negotiations (on agriculture and services) and how they could work together to push their interests in a sustained way.

There was also an opportunity to use the TRIPS review to take account of the debate, now taking place much more outside the WTO than inside, on issues such as patents and medicines, so that changes can be made in TRIPS to address the issue of access to medicines.

He added that the preparations and agenda for a new round and the preparations and agenda for the 4th Ministerial were separate issues and should not be mixed.

The lesson from Seattle was that “there is a need for transparency in negotiations,”and to prevent a regression to the past practices, and “a need for respect of the rules and procedures in the WTO, especially at the Ministerial meeting, “which were disregarded at Seattle when a working group on labour standards was set up without its being brought first before the plenary.. We should not allow ourselves to be taken for granted.”

There is also need for Geneva-based officials of developing countries to speak with one voice with capital-based colleagues. Sometimes, trading partners engage with senior officials of developing countries in the capitals, whilst excluding Geneva-based officials, and this should be resisted.

Ambassador Ali Mchumo of Tanzania said the major challenge for least developed countries is to pronounce their response to the proposals for a new round. There are intense pressures placed on them to accept a Round, and our response has to be made quickly.

He added that if a new Round is on the table, it must be a limited Round without the inclusion of new issues, as these would impose more burdens on LDCs, which would not benefit.

The negotiations on implementation issues was an ongoing process, and not tied to a new round. It will continue beyond Doha. Another priority, said Mchumo, was to insist that special and differential treatment must be implemented wherever they are in the agreements. And for LDCs, a major priority is that issues relating to capacity building should be pursued.

Ambassador S. Narayanan of India said the greatest challenge is to ensure that the rules-based WTO system, that the WTO is supposed to be, is really operating as a rules-based system, instead of operating as a power-based system. If developing countries work together, “we can make the system more equitable.”

On the issue of a New Round, Narayanan said the mandated negotiations and reviews are already a big agenda, and these are enough subjects to constitute a Round. It was a fallacy to argue that only with a comprehensive new Round with many subjects could there be a balanced result. The Uruguay Round was big but the results were not balanced, as we now know from daily life in developing countries. Thus, it was not true that only with a larger agenda could there be a balanced result.

He said if developed countries showed so much insincerity, it would be difficult to build up the WTO. He cited their reluctance to take account of the crisis on patents and drug prices in the WTO itself, and the lack of interest and attendance by developed countries of a WTO seminar on technology transfer.

“Unless the present inequalities are removed in [the] WTO, I do not believe in a New Round,” he concluded, adding that developing countries face the challenge of getting their act together so that their collective voice is heard.

Mr C. Raghavan, Chief Editor of the South-North Development Monitor, who chaired the session, said that if the panellists, and the representatives of the various developing countries who spoke so clearly at the seminar would speak up equally plainly at the WTO, he had no doubt that the interests of people in the South would be preserved. The WTO only understands the language of ‘No, No’, and there is no scope there for ‘yes, but..’, which would be interpreted as acquiescence. Otherwise, he said, the developing countries whose economic sovereignty were already jeopardised may soon lose their political sovereignty too.

Pakistan’s Ambassador Munir Akram, at an earlier panel session, spoke on the Qatar Ministerial Conference and said it was no secret that many major players wanted a new Round. There would also be a major effort, at the forthcoming UN Conference on LDCs, to erode the position of the LDCs (against a new round) and get some endorsement from them for a new Round. The major push for the new Round was coming from the European Union, which was arguing that to compensate them for their loss in agriculture, they need gains in other areas like investment and competition policy.

But it also seemed clear that the proponents of these various proposals do not know what they want. The discussions indicate a sense of political confusion, if not economic confusion, as to the objectives they want to pursue and the processes to pursue. “This sense of confusion on their part is the saving grace for developing countries,” Akram commented wryly.

The big question mark was what were the US objectives? Their priorities seem to be the Free Trade Area of the Americas Agreement. At the same time, they were also seeking ‘trade negotiating authority’ for a round at the WTO. It was however unclear how long this process would take before Congress gives the authority. Until then, the US would be circumscribed in its ability to push proposals.

Another complicating element was the balance of power in the Congress, where the Democrats were likely to press for something on labour and environment issues, and whether these would be part of the US negotiating position. These, for any group of developing countries, will kill the possibility of a round.

Another possibility of the WTO going awry related to the accession of China to the WTO and the position of the US and China. His own suspicion was that “if China does not enter the WTO before Doha, the possibility of an agreement at Doha on a Round will be diminished, and not enhanced.”

Both the US and the EC were aware that there was a core of developing countries with sufficient degree of resilience to resist political pressures that would be mounted on the Third World to agree to a round.

In this light, the challenges for the developing world was clear. They would be facing pressures on investment, competition policy, labour standards, environment and new issues, which would further disadvantage them in the context of the WTO and the new structures of protectionism. Instead of being defensive, Akram said, they should go on the offensive, pick up issues of interest to themselves and put them on the table and press for negotiations.

These issues were:

        implementation, the items in paragraphs 21 and 22 of the Mchumo text and elaborated elsewhere. They were told that it was not feasible to do anything on them now and developing countries must wait for a new round and once it was launched, these could be dealt with. But if something could be done within a new round, politically then, it could be done now too. The conditionality of a new round was a political condition. Before Seattle, the developing countries wanted these issues to be resolved before Seattle, and others within the next year. In Akram’s view, they must insist on implementation issues being resolved before Doha, and others within the next year, by the time of the 5th ministerial. Implementation was a political, and not a technical problem, and the solution depended on how strongly developing countries would be together.

In several areas for mandated negotiations, the developing countries had made progress on an agenda, such as in agriculture - for a development box, food security, special and differential treatment; in services, for mode 4 (of delivery of services), but which needed to be fleshed out; the review of the TRIPS agreement and the major development problems relating to them that were only now emerging - the pharmaceutical patents issue had now come to the fore, but there were many others in this area. There was the issue of the ‘positive agenda’. They should formulate their own proposals as in regard to trade and finance, trade and commodities and a number of other development issues.

Uganda’s Ambasador Nathan Irumba, who commented at that session on the developing-country response to the new issues, said they should be guided by their experiences in terms of implementation and the Uruguay Round. The harmful effects of the concessions that developing countries made in the Uruguay Round were very clear - - for e.g. in TRIPS and the generic drugs, the DSU system itself and a range of others. Experience should guide developing countries into being cautious against entering any new commitments. Developing countries needed domestic competition policies, not an international one, which would not help them. For investors, the over-riding question is not the existence or otherwise of an agreement, but the conditions of the economy of the host.

As for the LDC conference in Brussels, the WTO questions were not issues, though there would be pressures on the LDCs on this. But the LDCs were part of the Group of 77, and so long as they were supportive of each other, they would be able to stand together. So far, most developing countries were not enthusiastic about a new round. Unfortunately, each ministerial meeting of the WTO was being seen as an event to launch a new initiative. The preparations for the Ministerial and the Round should be kept separate.

UNCTAD Secretary General Mr.Rubens Ricupero, who also spoke at the panel, made two main points. Firstly, the WTO is not the only game in town as there are also developments in the bilateral and regional levels which have effect on developing countries. For example, new issues were being pursued in bilateral agreements.

Secondly, the most important implementation issues stem from the efforts to extend the multilateral trade system beyond market access and trade liberalisation issues. Thus there are now issues such as IPRs and TRIMs that limit the flexibility of developing countries to have development policies. This should be kept in mind as discussions proceed in the WTO on inclusion of new issues.

He said that it would be unwise if market access is given to developing countries but then they are deprived from taking advantage of trade opportunities due to new constraints put on them. “Thus there should be limits placed on expanding the issues of the trading system.”

Mr. Ricupero, who had addressed the seminar at the opening session in the morning, and had answered questions, recalled his views at the TWN seminar last year that it was not a bad thing if Seattle had failed to launch a new round and that from the perspective of developing countries, gaining time was generally positive. But gaining time was useful only if the time gained was utilised to prepare themselves better... “If it (the gained time) is merely used to postpone decisions, then sooner or later you face problems,” Ricupero added.

Developing countries, such as those in the Cairns Group, he noted, had taken on more obligations at the end of the Uruguay Round in the hope and belief that this would increase their market access in agriculture and their share in world agricultural trade. But when one looked at the data, the share of the developing countries in the world agricultural trade had increased only by one percentage point, “too little for all the pains and sacrifices ..and the efforts put into the negotiations,” Mr. Ricupero added, speaking of his own experience as a Brazilian negotiator. To understand why this happened, developing countries need to fully analyse the past and reach a correct diagnosis and apply the outcome to their current problems and stances.

During the Uruguay Round, the developing countries met frequently, discussed the issues thoroughly. And, while not all of the same mind, and there were differences, they were still able to make a clear assessment, and people knew what they were negotiating.

The countries interested in agriculture or textiles thought they would have added value, but at the end when the negotiations were concluded, the results were not satisfactory.

In what seemed to be a reference to the idea being floated for possible plurilateral outcomes in negotiations on some new subjects like investment and competition etc, Ricupero also suggested the need for a careful assessment of the basis of the Uruguay Round’s launching as a ‘single undertaking’, as well as its conclusion in 1993 as a ‘single undertaking’, with everyone having to sign on and undertake all the obligations, and the past experience in the Tokyo Round when countries did not have to sign on to all the agreements that were concluded, and there were some plurilateral agreements and codes.

At a recent meeting he had attended in Brussels, a former US negotiator at the GATT, now in the private sector, had said that the LDCs joining the WTO was a mistake since they could gain little and could not carry out their obligations. On the same lines, Ricupero wondered whether having some plurilateral agreements in new areas would result in giving more flexibility. This issue, he added, would be required to be analysed carefully, and a current diagnosis of the past reached, before coming to some conclusions.

But Mr. Raghavan, who had chaired that session, referred to a question from a participant about the ‘single undertaking’, and the views of Prof. Gerry Helleiner at the Prebisch lecture in UNCTAD on the single undertaking issue, and said the ‘single undertaking’, and the compromise for parallel tracks of negotiations on goods (where the single undertaking applied) and services (which was separate), achieved at Punta del Este, was negotiated between India and Brazil on the one side and the EC and US. Mr. Paulo Nogueira Batista of Brazil, one of the negotiators, was now no more. But he had got into touch with the Indian negotiator, Mr. S.P.Shukla after the Helleiner lecture, and Shukla had explained the history, and this had been set out in the SUNS #4810 (‘South may be ensnared into a New Round’) and this was also dealt with by Mr. Shukla in a paper for the Helsinki-based Wider Institute.

Developing countries, Raghavan said, should not again fall into the trap of getting investment or any other issue into the WTO negotiations, even under the guise of a plurilateral agreement, and then find themselves facing more imbalances and more pressures later to join the plurilateral agreement.

As for the talk of a plurilateral agreement on investment, or reducing its scope even further by merely stipulating ‘transparency’ etc, Mr. Raghavan said developing countries would be putting themselves on a dangerous path if they were to fall for these. When even free trade ideologues like Jagdish Bhagwati and T.N.Srinivasan were now conceding that intellectual property protection, under the guise of its being ‘trade-related’ had no place in the trading system, it did not make sense to bring in the investment issue.

If investment was brought into the WTO to protect the rights of investors and owners of capital, on the ground that investment had a relationship to trade and growth, then for the sake of equity, the rights of workers, women and gender equality and other social issues too would need to be brought in. Developing country NGOs now opposing these issues (because of the overloading of the trading system and its power balances) would then be forced to join the moves for putting labour and other issues too, he cautioned.-SUNS4856

Martin Khor is the Director of Third World Network.

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