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Implementation debate between peoples on different planets

by Chakravarthi Raghavan

Geneva, 30 Apr 2001 - If the meetings of the World Trade Organization, and its General Council had been open to the public, any visitor in the public galleries, of the GC Special Session on Friday (27 April) might have thought that it was a debate between people living in two different planets, rather than those living in the same world who have been seized of the issue for three years now.

The Special Session of the General Council was discussing the ‘implementation issues’ and the report of the Chairman, Mr. Stuart Harbinson of Hong Kong China, on the consultations he had been holding on these questions since he took over from his predecessor (who had been engaged in that task the better part of 2000).

The GC Chair, Mr. Harbinson, in his opening remarks said the “picture overall ..  is somewhat mixed” and in his concluding remarks (after a number of developing countries had said there had been no progress) that “perceptions of progress vary, and in some cases they vary considerably....”

Harbinson, who has already taken in hand in a parallel process the work of drafting a declaration for Doha (and has listed the Singapore and Geneva new issues in a checklist), suggested a work programme on implementation with the next Special Session towards end of June or early July, and another Special Session or two thereafter, and a meeting in the autumn (before the November Doha meeting). He also said he intended to hold further consultations on subjects not touched so far - GATT 1994 issues, textiles, TRIMs, anti-dumping, rules of origin, subsidies and safeguards. He insisted that the work would be guided by the mandate of the General Council of 3 May 2000, that implementation would remain on a separate track, that it was an ‘action- and results-oriented process’, and the aim was to fulfil the mandate of completing the process by the 4th ministerial.

In brief, the US, EC, Canada and Japan and a few others (like Australia and New Zealand) claimed progress was being made on implementation questions, while a range of developing countries (India, Pakistan, Brazil, the ASEAN, Zimbabwe for Africa), reiterated that progress had been meagre or nil, and they needed to see results before the Ministerial meeting at Doha.

The EC which spoke of the ‘considerable progress’ made on these issues, spoke of issues of “technical, procedural or administrative nature” that could be “resolved rapidly”, while others of a “clearly political nature” carried real economic implications or would involve amending or rebalancing existing agreements, and therefore ‘negotiations’. And even proposals to modify agreements or their interpretation could necessitate changes to domestic laws of members and ratification proposals, the EC argued - in attempting to explain why things could not be done, except in a new round with new issues.

This was indeed a strange argument - considering that the WTO agreement, ratified by members, clearly provides for interpretation to be done by the Ministerial Sessions or the General Council, and a three-member division of the appellate body is disregarding this, and constantly adding to obligations by interpreting agreements..

The socalled implementation issues, and in specific terms of the problems and grievances of the developing countries that the Marrakesh agreement and its promises had not accrued to them, have been before the WTO, in one form or another, since 1998, and in a more general way had figured even at the 1996 1st Ministerial Conference.

Raised by Third World trade observers first, in terms of asymmetries and inequities of the WTO and its rights and obligations, that trade establishments of the developing world had to reckon with in their own countries, it was first sought to be ignored and ridiculed by the WTO systems and its establishment, and then grudgingly allowed to be discussed in a kind of ‘letting off steam’ view, and talk of technical help to implement.

And the World Trade Organization, and the power structures, have tried to wish away or fob off the developing world with endless talks, and business as usual attempts to suggest that the solutions to their problems lay in more liberalisation, and undertaking more obligations and commitments.

After failing to dispose off the issues (at Singapore) by talk of Ministers having addressed the issue in their plenary statements, the more dismissive view, ‘we implement our obligations, and you implement yours’, of the US Trade Representative (Mrs. Charlene Bershefsky) at the 2nd Geneva Ministerial, and failing to keep it off the Seattle agenda (and the preparatory process for draft declaration), the industrialized countries, and more so the Quad countries (Canada, EC, Japan and the USA) have been trying since Seattle (December 1999) to find ways to fob off the developing world with vague promises and inveigle them into new negotiations for new obligations, by holding out promises of redressing the past grievances.

Though initially raised by a few developing countries, and formulated into proposals in the runup to Seattle by the Like Minded Group (LMG) of countries, it has now found an echo in most countries, though some of their representatives at the WTO have gone along with the view of Europe and Japan that the issues can be tackled as part of a wider round of multiliateral trade negotiations.

But the issue refuses to go away, even if the trade negotiators could be persuaded or pressured, either to give up the issues, or agree to new round of negotiations on the basis of some vague promises of redress. For with every day in the life of the WTO (and the efforts of the majors to use this it as the instruments of Global Governance or “Back to the Future .. to a Global Liberal Order” as the Evian Group calls it), the public in developing countries are getting more and more disillusioned with the Faustian bargain struck at Marrakesh (1994) by their countries, and the demand is growing for redress and reversal.

The situation was perhaps summed up by Amb. Celso Amorim of Brazil, when he said that ‘legitimacy of the WTO’ is now at stake and the implementation exercise ought to be taken seriously by all Members.

Mr. Amorim said that in Brazil and other developing countries, there was a “widespread feeling of frustration” about the results of the Uruguay Round, and “the imbalances that could not be perceived back in 1993-1904 have now become apparent.”

Brazilian society as a whole, said Amorim, “is becoming increasingly sceptical about the benefits of the multilateral trading system and this is a trend that must be reversed.”

While Brazil had started unilateral liberalisation in the nineties, often at very high social costs, it had not been reciprocated by some major partners, and the markets of developed countries remain closed, particularly in areas of interest to Brazil such as agriculture. Fairly recently, Brazil had also been experiencing difficulties from implementation of certain agreements - Agreement on Subsidies and Countervailing measures and the SPS agreement, which have caused heavy losses to some sectors of the Brazilian economy.

“Against this background, it comes as no surprise that we face the risk of a tremendous backlash against free trade and the WTO system.”

“There is deep frustration in Brazil at what President Fernando Henrique Cardoso has often described as “asymmetric globalization. On the one hand we open our markets, but nevertheless our trade policies are inflexibly scrutinized under WTO rules by developed countries. On the other hand, developed countries’ markets remain closed in those areas where poor nations enjoy a comparative advantage, yet we do not have the appropriate legal provisions to challenge such practices in the WTO.

“This situation must be addressed. The legitimacy of the WTO is at stake. Much more than our governments, it is our societies that must become convinced that the WTO is necessary for and beneficial to our countries, as we still believe it is. In other words, we need to make the WTO more attractive to developing countries.”

Strong words, more so coming from a country that at an early stage of this debate had been more reserved.

The chair’s opening statement reported on the consultations held by him on the WTO agreements on SPS, Agriculture, Services and TRIPs - and varying phraseology was used about complex problems and proposals.. A sample of the report provided below ,give a flavour of the way the issues are being dealt with.

·        On the SPS, the substance of his views did not indicate any real progress on any of the issues

The report said that in terms of the ‘outstanding tirets’ in paragraph 21 of the Mchumo text, “further consideration and consultations were needed on these complex issues.”. Para 21 refers to the para of the draft declaration (Mchumo text) sent to Seattle by the then Chair of the General on his own authority.  That text listed various implementation proposals, with para 21 listing issues for decision by Ministers at Seattle, and para 22 on issues to be taken up and resolved within one year thereafter. The chair also noted that the issue of difficulties preventing developing countries from having equivalence agreements had been referred to the SPS committee, and that the committee to work on these issues. He also spoke of a ‘first run through’ of issues under this agreement in para 22.

·        On agriculture too, there was no progress, only a report of continuing talks.

The report said two of the issues were part of the agriculture negotiations and there was thus little hope of immediate progress in the context of implementation. On the issue of the Marrakesh decision on Net food importing and least developed countries (NFIDCs), the proposals were being discussed in the agriculture committee, and the vice-chair of that committee was holding informal consultations on food aid, access to financing and technical and financial assistance. The General Council will receive a progress report in May. The issue of export credits, and its not being used to circumvent export subsidy commitments, Harbinson report spoke of the issue being under discussion in the Agriculture Committee. The GC has taken a decision on the issue of tariff rate quotas, and it had been sent to the Agriculture Committee, and the GC could keep in view the “possible desirability” of a report to the July meeting.

·        On GATS issues, the discussions were ‘rather encouraging’ and the GC may need to come back to it.

·        On TRIPS and para 21 issues, the picture was ‘rather mixed’, and the GC would need to come back to them sooner rather than later. On some of them, the likelihood of finding was to resolve the issues in the present process is ‘quite low’. As for the relationship between TRIPS and the Convention on Biological Diversity (CBD), the TRIPS Council had held a discussion on the basis of submission from members, and work on the issue in the TRIPS Council was progressing. As for Art 66.2 of TRIPS (obligation of developed countries to provide incentives to their enterprises to transfer technology to the least developed), the issue was on the agenda of the TRIPs council session for April, and will be taken up in June. The council was also due to devote a full day in June to the issues of access to medicines.

·        On cross-cutting issues, and particularly making operational some of the special and differential treatment provisions, on which a large number of statements had been made in the 19 March consultations, the GC would need to come back to them, and particularly how the WTO might address supply side constrains.

With the WTO’s method of working, specifics sought to be considered in informal consultations, which many view as an attempt to wear out the developing world, delegations come to the formal meetings to make statements and put them on record.

The Friday meeting was no exception and nearly 30-40 delegations spoke in two sessions, whose only conclusion was for an action- and results-oriented process to be continued on a separate track (from the Doha preparatory process)!

Thailand on behalf of the ASEAN said the issues and concerns listed and agreement in May of 2000 should not be ‘allowed to backslide’. On issues and concerns referred to subordinate bodies, the GC should decide on those where there had been a report and set a deadline for report by other subordinate bodies. There should also be intensive discussions on other substantial outstanding issues and concerns, such as anti-dumping and subsidies as soon as possible. To complete this process before the 4th ministerial, there should be three more formal special sessions on implementation - in June, July and end of October, with each session to be preceded by informal consultations.

The implementation questions could not be resolved “without engagement in good faith” from all members, and the confidence building process and a successful Doha Conference would hinge partly on the outcome of the implementation process.

The EC in a lengthy intervention professed to see progress on implementation proposals, and that the EC took the issue very seriously to find ‘practical solutions to genuine problems’. The EC could not agree with the view that very little progress had been made. In the EC view there were some proposals on which decisions could be reached in the coming weeks, others that would require decisions at Doha by Ministers, and yet others that may need negotiations after Qatar. The Ministers could take some decisions at Doha on some issues relating to subsidies, anti-dumping and textiles and clothing. Others would need negotiations. In this last, the EC spoke of the need for a mandate by ministers at Doha “to revisit the special and differential treatment provisions”.

Pakistan said that the May 2000 General Council decisions called for actions and results before the 4thMinisterial. It disagreed with the EC on ‘special and differential treatment’ and said developing countries could not be asked to pay twice. The results of the consultations were not ‘mixed’, but ‘meagre’. Pakistan had been most disappointed that there had been very little discussion on textiles, and there should be one dedicated session devoted to the textiles issue. “Results in textiles will be the touchstone” of Pakistan’s assessment of the success or failure of the implementation exercise. And it would be difficult to move beyond implementation, until decisions for solutions were adopted before Doha.

Japan spoke of the points of progress highlighted in the Chair’s report, but said that implementation was not the only issue to be addressed in the preparations for Doha. The implementation questions had to be seen in a wider perspective, and Doha was not the terminal process for it. The Ministers should be asked to take a decision or decisions at Doha on ways to resolve them, and not necessarily to resolve them at Doha.

The US too claimed, like Japan and EC, that there had been progress. For over a year now, the US had exercised ‘due restraint’ on TRIMS, and was committed to build on proposed solutions. The US was also pleased that the TRIPS council would discuss in June the flexibilities in the TRIPS to deal with health crises.

Zimbabwe, on behalf of the African group, said implementation was a crucial subject and the resolution of the issues under it would go a long way towards instilling confidence in the system for the African Group. All outstanding implementation issues should be resolved no later than the 4th Ministerial Conference. For the African Group, an issue of critical importance was to the operationalizing of the S&D provisions of the WTO agreements and make them binding. This would make a positive contribution to the “equitable integration of developing countries into the multilateral trading system”. It was also necessary to ‘revisit’ the Uruguay Round Agreements to bring equity, balance and mutual benefits to the developing countries.

Tanzania, speaking for the LDCs, said if there was progress, it was in very limited areas, and there was still a big ground to be covered. Tanzania was particularly concerned over lack of progress in areas such as SPS, TBT, TRIMs and TRIPS and the cross-cutting issues. Implementation issues had to be resolved by Doha. If they were unable to agree on what to report on implementation, “this would cast a very big shadow on the whole agenda of the Doha Conference.”

India, commenting on the Chair’s views about Customs Valuation and TRIPS. India was not happy either with the work of the Customs Valuation committee or the report of its chair. As for TRIPS, India was glad there would be a special day’s meeting in June of the TRIPS council, to be devoted to access to drugs. India wanted a comprehensive report from that meeting to the General Council on access to drugs and exceptions to patentability as well as the relationship between TRIPS and CBD. There should be a special session of the General Council devoted to TRIPS issue, India said. These issues were engaging the attention of governments, NGOs and civil society. It would be “extraordinary” if the WTO ministers at Doha ignored the subject.

Brazil disagreed with the chair’s view about progress on relationship between TRIPS and CBD, and said as far as Brazil knew the TRIPS council had discussed the issue but “little progress could be made due to resistance from a few delegations.”

This was a topic of particular interest to Brazil, and it was disappointed with the progress so far made.

Brazil also objected to categorization of implementation issues (those that could be decided now, some at Doha and others in new negotiations). By excluding from the start some proposals considered ‘too difficult’, even before members engaged in serious and substantive discussions, one eliminated the chance of ever reaching an agreement on them. It would defeat the very purpose of the exercise to which they committed themselves by the 3 May 2000 decision that the General Council “will assess the existing difficulties, identify ways to resolve them and take decisions for appropriate actions.” Even if the GC was not in a position now to take a decision, they should go through the first two phases.

In effect Brazil served notice of the touchstone it would apply, by citing the statement of President Cardoso at the recent Quebec summit of the Americas: “We will insist that free trade benefits should be equally shared by al participants, that trade opening should be reciprocal and that it should lead to attenuation rather than the aggravation that exists in our region.”

Mauritius called for a structured and focussed plan of action on these questions between now and Doha.

New Zealand said progress would be possible only on basis of consensus, and the (implementation) proposals were just proposals - they had to be examined, evaluated and discussed, and “will not always be accepted.” New Zealand also insisted that there could be no renegotiation of some elements of existing agreements entirely on their own, suggested that the implementation issues on the table had been made in the context of a “broader process” (for a new round) before Seattle.

Malaysia objected to any proposals for categorising the outstanding implementation-related issues (as the EC put it, in terms of what could be achieved before Doha, at Doha and after Doha). Many of the issues in the paras 21 and 22 (of the Mchumo text) had not even been discussed - for e.g. those in the area of subsidies.

“We suspect that proposals to categorize are only attempts to circumvent the real issue of finding solutions to implementation concerns.”. If these issues were not addressed and resolved before Doha, Malaysia added, “they could seriously impinge upon the preparatory process and, our fear is that it could lead to grave consequences.” Malaysia cited in this connection an issue (in the area of subsidies) not so far considered at all, namely, that ‘certain developmental programs’ implemented by developing countries should be considered as ‘non-actionable’ within the meaning of Article 8 of the subsidies agreement, or as being within the meaning of ‘Article 8 type’ of subsidies.

Developed countries provided a range of subsidies as grants, either monetary or otherwise to investors. They were given upfront to persuade a potential investor faced with a difficult choice of site in selecting the location for investment.  This option was open to developing countries, but given their limited resources, they could not provide such grants as incentives. “But ironically, the fiscal incentives provided by a large number of developing countries were considered actionable. These were provided only to help offset the inherent disadvantages faced by investors in developing countries, such as lack of suitable infrastructure. And they are not provided up front as grants.”

This was just one of several proposals in the area of subsidies that needed to be addressed and resolved before the 4th Ministerial, and real solutions provided to address the inequities and imbalances, so as to restore the confidence of developing countries in the WTO multilateral trading system.

As for the issues given to the subsidies committee, Malaysia complained that many of the questions posed by some members in that committee were “simply not of a technical nature” and were unnecessary to find technical solutions or recommendations.

Australia said that proposals involving changes to WTO rules and relevant domestic legislation, and changes to domestic legislation, could best be achieved in the context of broader negotiations. Canada professed to see progress on implementation in the chairman’s report.

Egypt said in terms of results, not much had been achieved so far. When Egypt, with other developing countries had put forward concrete proposals on implementation issues in the runup to Seattle, “our objective was, and is, to rebalance the Uruguay Round agreements in different areas .. which are major priorities for us and to address the inherited inequities in those agreements in a meaningful way so as to be able to move forward.”

Egypt cited as examples, the non-realization of promised benefits in agriculture and textiles, and the various imbalances in agreements, the cross-cutting issues including the issues of S&D and making them operational, rather than being dealt with on a ‘best endeavour’ basis as now.

The 3 May and 15 December decisions of the General Council were very carefully negotiated and drafted and as such accepted and agreed upon by all the members.  The decisions were clear and precise and left no room for attempts at misinterpretation or rephrasing. The Council was required to address the implementation issues with a view to resolving them and adopting decisions no later than the 4th Ministerial meeting now set for early November. There were only five working months away from that meeting, and the state of play on implementation was “unimpressive and seriously disappointing.”

Egypt had hoped that their major trading partners would be more forthcoming and displaying. Such a level of engagement had been lacking, but things were “not yet hopeless”. Egypt had hoped for meaningful progress on areas of concern to it - Agriculture, SPS, TRIPS. Issues relating to subsidies, textiles and clothing, anti-dumping, TRIMs and rules of origin had not been covered at all in the Chairman’s texts.

The General Council should agree on a clear ‘road map’ or ‘work programme’ from now till Doha. There should be constructive engagement and political will from the trading partners.  At the end, India and Pakistan responded by pointing out that the implementation issues had been raised much ahead of the Seattle preparatory process, in September 1998 when there was no agreement on a “single undertaking”, and these stood on their own. – SUNS4885

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

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