Revised GATS guidelines attempts to mollify developing world

by Chakravarthi Raghavan

Geneva, 23 Mar 2001 - - Services negotiators were due to meet at an informal meeting of the Special Session of the Council on Trade in Services (CTS) Friday to consider a new draft text of ‘Guidelines and Procedures for the Negotiations’ that has been prepared and circulated by the secretariat in the light of the comments on its third draft on 20 March.

The new (fourth secretariat draft) - JOB(01)/39 - has eliminated some of the parts in square brackets in the earlier third draft, including the idea of a standstill during the negotiations and a few other points (put in to reflect the ambitions of the US and EU, and their service industries).

In an initial reaction, one of the negotiators said at first glance, the developing world could ‘live with this draft’, but that there are some areas of concern still to be dealt with.

There are a few formulations that could land the developing country into problems during actual negotiations, particularly when new negotiators come in, or ambiguous language is adopted in the outcome which later would be interpreted in the dispute settlement processes, by the appellate body claiming that the dictionary meaning of the words used is not clear and the context and negotiating history having to be looked into, and citing the guidelines as part of the negotiating history.

Also, there are one or two points in the latest draft that is causing some concern to some members of  the loose coalition of 74 developing countries - the group of 24 who had tabled detailed draft guidelines, the African group and the Caribbean who had also put forward their own proposals, either as detailed draft guidelines or as elements for such a draft, and who have given broad support to the G24 draft.

These points of concern to some relate to concept of ‘small’ economies or enterprises.

A paragraph in the objectives requires that the process of liberalization that is to take place with due respect for national policy objectives, the level of development, and the size of the economies of individual members, both overall and in individual sectors.” A proposal within this to make special mention of ‘small economies’, which was not to the liking of several of the developing countries from Latin America, has been modified to say “due consideration” is to be given to the needs of “small and medium-sized service suppliers.”

This is still a sticking point, and more so because of difficulties in defining these. A small or medium-sized enterprise in the major industrial nations (whose claims for due consideration would also be covered by this wording) would be much more than some of the largest service suppliers of developing countries. Should the ‘small’ or ‘medium-sized’ suppliers from developing countries (say Mauritius or the Caribbean, the original sponsors of this distinction) be put on the same footing as those from the industrialized world?

The stipulation under ‘Scope of Negotiations’ in the third draft that all ‘MFN Exemptions’ will be subject to negotiations in the new GATS talks, has now been qualified by removing the square brackets around another sentence (in the same para in the third draft) that ‘appropriate flexibility shall be accorded to individual developing country members.”.

The latest draft (relating to some of the post-Marrakesh ongoing negotiations on amplifying the GATS rules) now provides that negotiations on safeguards (under Article X of GATS) “shall be completed” by 15 March 2002 - as agreed in a decision adopted by the CTS on 1 December 2000.

But in respect of some of the other negotiations - - under Art.VI:4 on domestic regulations on qualifications for some professional  services, under Art.XIII (multilateral negotiations on government procurement of services) and Art XV (subsidies), the latest draft has the wording “shall aim to complete” which is a best endeavour language.

Some of the developing countries, particularly those from Latin America, want these also to be put in mandatory language for completion before conclusion of negotiations on specific commitments.

Some others who are opposing the introduction of negotiations on ‘government procurement’, even in its initial form of ‘transparency’ into the WTO multilateral agenda and for the new round do not want to allow government procurement talks in services, and are unwilling to any mandatory language.

Two of the developing country demands, accommodated in the text, are not to the liking of the major industrialized nations.

These relate to:

·        the CTS in Special Sessions (running the negotiations) being asked in mandatory terms, ‘shall’, to continue to carry out an assessment of trade in services in overall terms and on a sectoral basis with reference to the objectives of GATS and Art. IV (increasing the participation of developing countries in this trade and for their access to networks), for this to be an ‘ongoing’ activity, and for “negotiations shall be adjusted in the light of the results of the assessment.”

·        a para that says that ‘to ensure effective implementation of Articles IV and XIX:2 of GATS’, the CTS when reviewing progress in negotiations shall consider the extent to which Art. IV is being implemented and suggest ways and means of promoting the goals established therein, and “shall also” conduct an evaluation before completion of the negotiations, of the results attained in terms of the objectives of Art. IV.

In the third draft, this had been formulated in terms of providing technical support and assistance to the developing countries to make their assessments and negotiate!

In the GATT and WTO history, the broad coalition of developing countries on the GATS talks,  is probably the first time that such a large group of developing countries, cutting across regions and sizes of their economies had come together to take a position, unnerving both the industrial world and the secretariat itself, which is long accustomed to take the lead from the majors.

One Third World trade negotiator said that the large size of the developing countries who took a similar position, accommodating their own differences, has been no doubt responsible for the kind of draft guidelines and procedures that has evolved.

The more or less common position that was adopted by these developing countries, coalescing around the first G24 draft and voiced at the CTS Special Session in Nov-Dec, resulted in a first draft that the US and EC  were very unhappy about. A second draft that was produced to accommodate them was rejected even as a basis for consideration by the 74 developing country coalition. After some further informal talks, including at meetings of the ‘friends of the GATS’ group outside, and a detailed exposition of views at an informal meeting, the secretariat produced a third draft which was discussed informally earlier this week. In the light of it, the secretariat has now produced a fourth draft. (SUNS #4841, 4859 and 4860 for earlier reports).

But behind the formulations and efforts of the secretariat to pay more serious attention to the views of developing countries, while continuing attempts to divide them, is the element of the secretariat as well as the US and EC as major demandeurs having been put on the defensive over the attempts to push a neo-liberal globalization agenda (of liberalization of goods and services trade and investments) at the WTO through a new round with new issues and cater to the appetites of the major service sector corporations

The experience of the Seattle process, where the ministerial meeting collapsed in the face of wide developing country opposition was quickly forgotten by the secretariat, and the EC, Japan  and the US, who have over the last year regrouped themselves to follow the same path as before, both in the runup to, and the 4th Ministerial meeting at Doha and attempts to launch a new round there.

The  WTO head and the secretariat, a short while after Seattle debacle, went on the offensive to ridicule and criticise the non-governmental organizations and their coalitions against the WTO and the new round, with Mr. Moore (in concert with the EC Commission, the UK development cooperation minister Claire Short and other ministers from EU countries) criss-crossing the globe to promote the new round with new issues - sometimes as a ‘development agenda’, and sometimes as crucial to attack poverty etc..

This wider objective has also got mixed up with the overdrive of the GATS wing of the WTO secretariat, before Seattle and since, in trying to push forward the new round of GATS negotiations - some times as part of the new round, and sometimes delinked from agricultural talks etc.

The strong criticisms of NGOs being voiced by, Director-General Mike Moore, GATS officials and the other parts of the secretariat - at meetings of service industries and in media briefings, and latest in ‘GATS - Fact and Fiction’ background note at the WTO” website - have perhaps not only fuelled the NGO opposition but enabled these voices to get a wider and better hearing.

In the process, the secretariat, and the trade establishments of the majors,  have been put on the defensive, forced to respond to the growing opposition of  activist non-governmental coalition of  North and South, many of them as well, if not better versed in political economy and trade theory than the  officials.

The NGOs have launched a public campaign, alarmed by the way the secretariat over the last few years has been consorting with the major corporations and promoting their interests in the trade body.

The outcome, has been what might be called the ‘foot-and-mouth disease’ at the WTO, more devastating than the one that has struck animal husbandry in Europe.

Every time the WTO Director-General Mike Moore and his senior aides open their mouths to advocate a new round with new issues,  they are putting their foot into their mouth, giving more points that the critics can pick and use against them. And the more they attack these NGOs, the more support and attention that the latter seem to be getting from the public and parliamentarians.

In the UK, about 170 MPs have signed ‘an early-day  motion’ (meaning in British parliamentary practice   an issue to be brought up soon for debate) for an impact study of the GATS on the public sector, and the Parliament’s development commission asking for special commission to look into it.

The latest example of criticisms of the NGOs resulting in more support for them is in the reactions to the views at the Ministerial Round Table on Trade and Poverty in the LDCs in London (initiated by Mrs.  Claire Short), and some interviews to the London media on this and earlier occasions by Mr. Moore, as also the WTO secretariat’s background note on the WTO website ‘GATS - Fact and Fiction’, which was put together after the UK-based World Development Movement raised these issues.

Columnist  George Monbiot, writing in the Guardian of 22 March, under the heading “Gats’ gaffes” has some caustic comments about leading ministers and politicians pleading ignorance of the details of the Uruguay Round agreements negotiated and concluded, without ministers and MPs really acquainting themselves with the details. Monbiot has warned against repetition in the GATS talks now by ministers of the labour government of the errors of the John Major government during the Uruguay Round in negotiating language that forced Europe into allowing imports of hormone-beef (or face US retaliation).

Monbiot’s column says that the ‘current champions of globalization’ (Moore, Claire Short et al) are “as dismissive” of the criticisms of the GATS as the Tories were of the outcome of the Uruguay Round.  Monbiot cites Moore as saying of NGO demonstrators, “the people that stand outside and say that they work in the interests of the poorest people, make me want to vomit.”

Referring also to Claire Short’s view that those who worry that the GATS talks would result in the privatization of public services were ‘conspiracy theorists’, Monbiot points out that the GATS rules were ‘complicated and contradictory’, with  much depending on how it would be interpreted, but that there was plenty in it and the ‘glib dismissal’ of its opponents’ views by Short and Moore were a ‘grave disservice to democracy’. Monbiot also gives short shrift to  the views of the EC, WTO secretariat and the director of its services division, and the assurances  by Short and Moore about ‘reversibility’ of  the concessions made under GATS or that developing country governments were not being bullied and marginalised in the negotiations by the rich nations, were just people ‘looking the other way.’-SUNS4862

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

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