Seattle to face implementation proposals

by Chakravarthi Raghavan

Geneva, 23 June -- While media headlines and public attention have been focused over the last two months on the impasse at the World Trade Organization over the selection of a Director-General, trade negotiators have been formulating various proposals for consideration of the 3rd Ministerial meeting of the WTO at Seattle beginning 30 November.

Unlike in the various rounds of trade negotiations under the GATT, including the Uruguay Round that ended in the WTO and its agreements, developing countries have been drawing specific attention to particular problems under particular agreements, problems of implementation and non-implementation, and formulating specific ideas and proposals to address them.

It will not be easy for the industrialized world to ignore or side-track the issues as in the past - either in the old GATT days or the initial days of the WTO, when the dogma of "liberalisation" and its benefits were accepted without question.

In terms of the schedules agreed, the General Council is due to receive proposals by July, and discuss them at informal meetings, and for delegations to use the August recess to consider them in capitals, and come back in September for negotiations and drafting exercises.

An informal meeting of the General Council is set for July second week, and another towards the end of July. The EU is seeking a formal Council meeting in mid-July where it could present proposals on investment.

The EC proposals on competition policy appear to have been virtually shot down by the United States, as well as by Japan and others who have made clear that they want anti-competitive practices of governments, including use of instruments like anti- dumping, as well as practices of private parties and government regulations and enforcement to figure.

The implementation problems of the Marrakesh agreement were virtually brushed aside at the Singapore Ministerial Conference in December 1996, with the remark that individual ministers had raised this in the plenary sessions.

In the runup to and at the Geneva Ministerial Conference (GMC) of 1998 also, there was an attempt to play it down, and problems highlighted by developing countries were sought to be disposed of in terms of providing "technical assistance" for implementation.

But paragraph 9 (a) of Ministerial Declaration adopted at the GMC specifically directed the General Council to set up a work programme and make recommendations to the Seattle Ministerial Conference on (i) issues, including those brought forward by Members, relating to the implementation of existing agreements and decisions; (ii) negotiations already mandated at Marrakesh, to ensure that such negotiations begin on schedule; and (iii) future work already provided for under existing agreements and decisions taken at Marrakesh.

The GMC also flagged some new issues and for recommendations by the General Council on: future work on the basis of work programme initiated at Singapore; the followup to the High-Level meeting on LDCs; and other matters proposed and agreed to by Members concerning their multilateral trade relations.

In terms of the Singapore agenda, the EU and Japan have been seeking negotiations on investment; the EU on competition policy; and the EU, Japan and the US on trade facilitation and government procurement.

In terms of the Geneva agenda, the US, EC and Japan have raised the issue of negotiations on industrial tariffs (with a virtually pre-determined conclusion for a standstill on applied tariffs, often much lower in the developing countries than bound, and for slashing the tariffs sharply to low levels).

The US and EC also want to bring in environment, and the issues of labour standards, obliquely to begin with.

The proposals under "trade facilitation", purportedly to cut red tape at customs and clearance of goods, appear in some respects to be those that were brought up by the industrial countries during the Tokyo Round, and subsequently in the Uruguay Round. On Government Procurement, while talking about "transparency", the EC and US have left little doubt that this is only the beginning.

But with the working parties set up under the Singapore agenda (on investment and competition issues) unable to conclude their work, proposals on investment and competition issues have also been brought up under other headings of the Geneva declaration.

In a series of formal and informal meetings of the General Council, developing countries, individually and in small groups, have now formulated specific proposals covering the whole range of agreements of the WTO, and have explained the proposals and what they expect.

These proposals include those in relation to the agreements on anti-dumping, subsidies and countervailing measures, sanitary and phyto-sanitary measures, trade-related intellectual property rights, trade-related investment measures. Both on TRIPS and TRIMS the proposals from the developing countries in effect call for a second look on some of the provisions that are coming in the way of development and industrialization and public health.

In terms of mandated negotiations, on agriculture, the views and ideas sketched out suggest that the next round of agriculture negotiations will not be one merely between the US and Cairns group on one side and the Europe and Japan on the other -- with the former pushing for "liberalization" and the latter attempting to protect domestic agriculture.

A number of developing countries, big and small, have raised questions relating to their own agricultural development and the policies needed to both to increase agricultural productivity as well as problems of their subsistence farmers and agricultural labour, which still accounts for a sizeable proportion of employment.

Among the other mandated reviews and negotiations are those relating to the Dispute Settlement Understanding, the review of the provisions of the TRIPSs agreement in Art. 27. 3 (b) relating to plants and animals other than micro-organisms.

While the industrialized countries want the review to be confined to "implementation" of the provisions, rather than the provisions, a growing movement within civil society, in the North and the South, is now focusing on review of provisions relating to the entire range of issues arising from gene-engineering, and a whole range of public policy, environment and health issues arising from it.

The basic assumptions of developing countries and others that by agreeing to the WTO and the DSU, they would be outlawing US unilateralism have not been borne out. It is not clear how they will tackle this.

In services, despite the understandings during the Uruguay Round, a clear statistical base to enable countries to assess the "directions of trade in services" and assess gains and losses in negotiating concessions is lacking. The services data is still based primarily on the IMF balance-of-payments data.

Several developing countries have also focused on the issue of "delivery" of services through movement of natural persons, but there is no indication that the industrial countries are serious in this.

Other serious issues in services trade that need to be tackled in terms of rules, include those relating to making operational the concepts in Art IV of GATS for increasing participation of developing countries in the world trade on services, improving their access to distribution channels and information networks and liberalisation of market access in sectors and modes of supply of export interest to developing countries. Also, yet to be formulated are rules on emergency safeguards.

Both in the negotiations leading to Marrakesh, and in the continued negotiations (after Marrakesh) in services, few questioned the view that developing countries by liberalizing their services sectors and enabling foreign service providers to come in benefit.

There is now some growing evidence that the liberalization of financial services, and enabling foreign banks to set up operations, does not necessarily enhance the ability of domestic trade and industry to have access at cheaper terms.

In fact, the liberalization process as well as the implementation of Basel guidelines on banks and their capital requirements, is leading both in industrial and developing world to the cost of banking services for what used to be thought traditional banking services increasing considerably.

While everyone talks of encouraging entrepreneurship and small and medium enterprises, the cost of banking services for SMEs as for individuals and households has in fact increased.

So far the major industrial nations have not reacted specifically to the individual proposals and papers and proposals formulated by developing countries nor have they allowed themselves to be drawn into a dialogue, though they have been talking vaguely that these are problems that need to be tackled. Privately they seem to think that these can be resolved through "waivers", on a individual country-basis, or by extension of time.

At the same time, the industrial nations are seeking some "trade- offs" in new areas, as a price for carrying out obligations they have already undertaken - whether for the removal of discriminatory restrictions on textiles and clothing trade, or further cuts in domestic and export subsidies on agriculture and agricultural tariffs. (SUNS4462)

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

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