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OLD GATT PRECEDENTS RUN AGAINST WTO TREATY

by Chakravarthi Raghavan


Geneva, 11 Oct 99 -- Launching a new round of trade negotiations at Seattle, and using the old GATT 1947 precedents to run the negotiations as a process outside the WTO framework, may be running against the specific provisions of the Marrakesh Treaty to establish the World Trade Organization.

Among the proposals (in the Chairman's 7 October draft) for a Seattle Ministerial Declaration, under the heading "Structure, Organization and Participation", is one for setting up a Trade Negotiations Committee (TNC) under the authority of the Ministerial Conference to oversee the conduct of the negotiations and alternatively, for the General Council to oversee the conduct of the negotiations.

The two, the proposal for a TNC and the other for the General Council, are placed in square brackets.

The report on the Chairman's draft in SUNS #4526 (see article titled "Dead-on-arrival draft declaration text?") had erroneously said the formulation for a trade negotiations committee was without square brackets. The draft in fact has formulated the two alternatives, and placed them in square brackets.

Though the Ministers are being given the choice of deciding in favour of a TNC or the General Council, a TNC, to run the negotiations and oversee its conduct, under the authority of the Ministerial Conference, implying that it will be only responsible to the Ministers, may be contrary to the provisions of the Marrakesh Agreement.

In the informal heads of delegations meeting that preceded the issuance of the 7 October Chairman's draft, a number of delegations had promoted the idea of a TNC, and to be chaired by the WTO Director-General Mike Moore. They had cited the past precedents of the Tokyo and Uruguay Rounds in GATT 1947, where the multilateral trade negotiations were launched by Ministers and run under their authority by the TNC, which was responsible to the Ministers (and not to the GATT bodies, the GATT Council or the annual session of the CPs).

But the old GATT was a provisional treaty or contract among governments, and had no institutional structure to launch any negotiations, excepting for an enabling provision on negotiations for tariff cuts.

All the multilateral trade negotiations (involving subjects and issues other than tariff cuts) were launched by Ministers of GATT contracting parties, meeting as such, and were political processes of Ministers, where they named and set up a special TNC to oversee and run the negotiations. At the end, the outcome was incorporated into the GATT and its framework as a result of the decision of Ministers.

The Uruguay Round, with negotiations in areas covered by GATT and other areas, was launched by the Ministers, who at the end concluded the negotiations with the Marrakesh Agreement establishing the World Trade Organization and incorporating all the multilateral trade agreements (MTAs) of the Uruguay Round in annexes to the WTO.

The MTAs, according to Art. II.2, are the "agreements and associated legal instruments included in Annexes 1,2 and 3" and integral parts of the Marrakesh agreement.

Art.IV.1 of the WTO agreement, establishes the Ministerial Conference (composed of representatives of all WTO members and to meet "at least once every two years") and provides that the Ministerial Conference "shall have the authority to carry out the functions of the WTO and take actions necessary to this effect."

The same para goes on to say that the Ministerial Conference "shall have the authority to take decisions on all matters under the Multilateral Trade Agreements, if so requested by a Member, in accordance with the specific requirements for decision-making in this Agreement and in the relevant Multilateral Trade Agreement."

The Ministerial Conference thus has two remits: one to carry out the functions of the WTO, and the other to take decisions on all matters under the MTAs.

Art.IV.2 sets up the General Council to consist of representatives of all Members, and "in the intervals between the meetings of the Ministerial Conference, its functions SHALL (emphasis added) be conducted by the General Council."

The Marrakesh Agreement, i.e. the WTO agreement, is not an MTA. The functions of the WTO, under Art.III.1 includes "implementation, administration and operation" of the WTO and the MTAs.

And under III.2, the WTO "shall provide" the forum for negotiations among its Members concerning their multilateral trade relations under the MTAs, and "may also provide" a forum for multilateral trade relations.

Either way, whether on further trade negotiations on matters covered by an MTA or on issues not covered by an MTA, these are "functions" of the WTO which can be discharged by the Ministerial Conference and, when that is not in session, fall within the sole competence of the General Council.

The Ministerial Conference cannot in any way dilute this authority of the General Council, and create a new body to which it can delegate these functions, such as being a forum for and running the negotiations under the responsibility of the Ministerial Conference, and thus bypass the General Council.

By setting up a TNC to run the negotiations, under the Ministerial Conference, the General Council is sidelined, in violation of the WTO.

This is not only the animal of the proposed declaration.

Para 25 of the draft provides for the negotiations to be concluded within three years, and sets out the principles on which it is to be based. A sub-heading, "Principles Governing the Negotiations" says, under a first bullet subpara:

"Single Undertaking: the launch, and conduct and conclusion of the negotiations shall be treated as parts of a single undertaking. The results of the negotiations shall be adopted in their entirety and apply to all WTO members...."

But the Marrakesh Agreement has an Article X on amendments to the treaty and its annexed MTAs, and some of these also provide for other special provisions for changing them.

The Marrakesh Agreement is also an international treaty where the mother of all treaties, the Vienna Law of Treaties applies; and the Vienna Law of Treaties, among other things also has provisions on what could be 'amendments' to an existing treaty, and what could not.

The "single undertaking" move is very different from the 'single undertaking' of the negotiations on various subjects under 'Trade in Goods' of the Punta del Este Declaration launching the Uruguay Round which was at best a 'political concept'.

The draft Seattle Declaration for a new round and a Seattle agenda, also has an item titled within square brackets "Coherence", and para 54 under that heading, in square brackets, envisages the establishment of a WTO Working Group on Coherence in Global Economic Policy-making, under the authority of the General Council to examine "matters of systemic importance to the proper functioning of the trading system arising out of the interface between trade, finance and development policies."

However, this working group is asked to examine the issue, not only on the basis of proposals of the WTO members, but also of the Director-General (who under the Marrakesh Agreement was deliberately provided with none of the functions of the executive heads of international treaty bodies, including the United Nations Charter, but only the function of heading and running the secretariat).

During the Uruguay Round, in some of the negotiating meetings, particularly on FOGS etc, when the secretariat, then headed by GATT Director-General Arthur Dunkel, who was also the head of the TNC, made some proposals. But some members objected, underscoring the point that the Uruguay Round negotiations were among contracting parties, and observers who were allowed to participate, and the secretariat were only a 'contracted party'.

Now in promoting coherence amongst the WTO, theoretically based on equality of membership and decisions by consensus, and the IMF and the World Bank, based on their one-dollar-one-vote corporate principle, the Director-General of the WTO is to have an equal say in making proposals with the members at large of the WTO!

Well, the WTO is a rule-based system, and not a system of rule of law. (SUNS4527)

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

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