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US, MOORE REBUFFED, WTO MINISTERIAL ENDS IN FAILURE

by Chakravarthi Raghavan


Seattle, 4 Dec 99 -- The 3rd Ministerial meeting of the World Trade Organization ended in shambles a little before midnight Friday, with the United States and the WTO head, Mike Moore being handed down a severe rebuff, and the trading system facing the worst failure in its 51-year old history.

US President Bill Clinton, USTR and Conference Chair, Mrs. Charlene Barhsefsky and Moore - all sought to put a spin on the outcome, and suggested that this was nothing unusual in the GATT/WTO system, recalling some past failed ministerials (1988 Uruguay Round Montreal mid-term meeting and the 1990 Brussels Ministerial to conclude the Round).

But the Seattle meeting ended in failure:

* when a number of small economies refused to be manipulated, marginalized and left out of the decision-making processes and acquiesce in decisions cooked up in 'secretive' so-called 'green room' processes;

* when some of the other major developing countries 'refused' to pay a price to enable the Cairns group of agricultural exporters, and the US, to gain concessions from the EC on the agricultural front; and

* when developing nations refused to be cowed down -- by street protests and demonstrations by US trade unions and some environmental groups, organized and encouraged by the US administration as host country, but which ran out of control -- and said 'no' to labour and environmental standards being linked to trade rights and obligations and open to 'sanctions'.

It was clear that the host country and Moore have suffered a severe rebuff at the conference, and this was likely to have some serious repercussions on US politics and the administration's attempts to control and run the WTO trading system to subserve US domestic partisan political processes and ends.

But judged by their responses at the final press conferences, neither the US nor Moore nor even the EC (which suffered a spectacular failure to launch a comprehensive new trade round to write new rules in new areas), seemed aware of what had hit them.

The EC Trade Commissioner, Mr. Pascal Lamy, showed some awareness, but seemed to be looking for new ways to continue the same old tactics of a few taking decisions and getting the others to accept it. Officially, the Seattle Ministerial Conference has been "suspended", and proposals on the table have been "frozen", as members take "time out", consult one another, and find "creative means to finish the job."

And, Director-General Mike Moore "can" consult with delegations, and discuss "creative ways" to bridge "the remaining areas in which consensus does not yet exist, develop an improved process which is both efficient and fully inclusive," and prepare the way for successful conclusion of the Ministerial which would then "resume its work."

Meanwhile, on 1 Jan 2000, two mandated negotiations will start 'technically' -- one in agriculture in terms of Article 20 of the Agreement on Agriculture (AoA) and the second, under the General Agreement on Trade in Services (GATS) for a further round of trade liberalization in services sectors.

But the way all this has been 'achieved' through some ad-libbed remarks of the Chair at a final meeting of the Committee of the Whole, and the Chair's closing remarks at the final plenary session (copies of which delegations had to get from the media), will create further tensions in Geneva between Moore and the General Council and its membership.

Over the weekend as they departed Seattle, ambassadors of some key developing nations (who had been participants in the 'green room') had only a 'hazy' view of what was conveyed to them at the COW by Mrs Barshefsky, had no 'texts' of the decisions on the "suspension" of the Ministerial or the "freezing" of the texts, and some confessed that they came to know about the "final plenary" - where Mrs. Barshefsky read out a closing statement of the conference decisions - only when this writer questioned them about it. With Moore determined to "fulfill" his contract and remain in office till end August 2002, the WTO will be unable to go through a normal catharsis of any political system or corporate management (where the CEO would have left, albeit with a 'golden handshake'), and try to pick the pieces and put them together again.

There is little doubt left in the minds of a large number of delegations, and many observers, official and non-official, that there was 'organization' and 'planning' behind the chaotic and confusing conference facilities inside, and a large part of the street protests outside, and there is much suspicion even about the violence, that created inhuman working conditions, physical and mental, under which the negotiations were conducted.

US media reports leave little doubt that the Clinton White House had planned a controlled 'street protest' by the organized labour and some of the 'environment' groups, in order to 'persuade' the conference to accept US 'demands' for labour and environment standards at the WTO, but lost control when other movements of civil society staged their own protests, and delegates refused to yield.

But in a continuing manipulative process, perhaps more ominous for the developing world, those responsible for and who ought to be "investigated" and held accountable for the Seattle fiasco, have been enabled to continue their manipulative role and find "creative ways" to pursue the same ends.

May be after a few weeks of 'cooling off', there will be acquiescence with the "creative ways", but the system will lose even the little credibility it has.

Several environment and labour groups "claimed" victory in the collapse of the Seattle meeting. And while the months of work by some development groups of the North and the South, and their lobbying and alerting of various parts of the government, parliaments and the public had some role in the final outcome, the Conference failed because of the very substantive differences among the major industrialized countries and between them and the many groups of developing countries on both the current remit of the WTO and on the many new issues sought to be brought in for new disciplines.

And there was also the growing determination of many small- and medium- developing countries not to be taken for granted, and their insistence on being part of the decision-making process, and not being asked to wait around until the majors and a few from the South are brought in to 'negotiate' and present the outcome to the others for endorsement!

No new round was launched, nor was there any agreement on the need for one and its agenda. The only piece of paper that delegates could take back to their capitals was a one-page text 'as delivered', closing remarks of US Trade Representative and Chair of the Conference, Mrs. Charlene Barshefsky.

But even this they got from press releases of the US mission, and that too from journalists, but not as an official document from the secretariat.

The only negotiations that will begin irrespective of the failure at Seattle are the mandated negotiations under Article 20 of the Agreement on Agriculture (AoA) for continuing the reform process, and the next round of negotiations for progressively higher level of liberalization of the Trade in Services.

But while these will technically start on 1 January 2000, there could well be a long period of 'negotiations' on what to negotiate in agriculture, and what the terms in Art 20 of the AoA mean - and the deadline of 2002 when the so-called 'peace clause' (against disputes in agriculture, based on other provisions of the WTO, than those in the AoA).

And while there is much talk and claim of a relatively less controversial agenda for the services negotiations, there are many issues still to be addressed and resolved, and one that no one seems willing to face up to, namely, that negotiators still have no proper basis of statistical data on trade in services and directions of trade. All current data are derived from the 'residuals' of the IMF's Balance-of-Payments data, whose databases on foreign and domestic services use a different methodology than that in the GATS.

And any way, the year 2000 is the quadrennial US presidential election year, and until the next President is in the White House in January 2001, and the administration gets organized, there can be no serious negotiations.

And Barshefsky confirmed at her subsequent press conference that sometime in the afternoon she had reached a decision that no agreements would be possible, and had consulted the White House, before going to the 'Green Room' and then the COW for suspending the Conference.

The issues before the trade organization, she acknowledged in her final plenary remarks, were diverse, often complex and novel. Also, the WTO has outgrown the processes appropriate to an earlier time, and needed a process "which had a greater degree of internal transparency and inclusion to accommodate a larger and more diverse membership."

This was a very difficult combination to manage, she said, and stretched both the substantive and procedural capacity of the Ministerial and "as time passed that divergences of opinion remained that would not be overcome rapidly."

The final plenary was preceded by a 'Committee of the Whole' of the Conference where Mrs. Barshefsky spoke. But no text of her statement was made available, either by the US Mission as they normally do nor by the WTO secretariat, not even to the delegations, many of whom had been complaining throughout the week of the inadequacy of the conference facilities for hearing speeches and interpretation in various languages.

Perhaps one has to await the 'creative' ability of the secretariat and its production of any minutes.

At a press conference after the 'suspension' of the meeting, Mrs. Barshefsky claimed that "everything" on the table was "frozen", implying that various proposals and compromises that have figured in the 'green rooms' and 'working groups' (many of whose chair and their reports have been challenged as inaccurate at the COW on 2 December) or texts that the secretariat might have prepared and presented, were there, could not be taken back and could provide a basis for further negotiations.

She pointedly made a reference in this connection to a 'text' on trade and labour standards and a working group that had not come out of any of the five working groups of the conference or the 'green room' process.

But the EC Commissioner, Pascal Lamy seemed to imply at another press conference (after Barshefsky's) that various compromise proposals and texts at the informal talks and 'green rooms' were on the basis that 'nothing is agreed until everything is agreed' and hence the various texts that were evolved were no longer there, a view that some other trade diplomats too seemed to share!

Deep and unbridgeable differences of substance - as between the major industrial blocs, and varying coalitions of developing countries -- and even sharper differences as between the WTO leadership and major industrialized countries and the large number of developing countries over the decision-making processes and transparency of such processes in a "rules-based" organization were primarily responsible for the failure here.

But the ignoring of rules and procedures for declaring a suspension and setting up a process for 'creative ways' does not bode well.

And developing countries may still face the same coercive processes at work in Geneva to force them to accept what the major powers agree among themselves -- unless they insist on 'rules'. This was the biggest failure in the 51-year history of the trading system (under the old GATT and the 5-year old new WTO).

Even the 1982 GATT Ministerial (where the US came with demands for a new trade round covering new subjects, and failed to muster support) ended in a declaration and a clear work programme of two years, leading to a difficult preparatory process of two more years, and 7 years of difficult and complex negotiations to create the WTO and its agreements.

And while the Montreal and Brussels Ministerials of the Uruguay Round failed to agree, they had "official" texts before them, which were transmitted back to Geneva for further work.

In this case, there are over 300 official proposals tabled during the Geneva preparatory process at the General Council, an informal 'chairman's text of 19 October for a draft Ministerial Declaration, full of square bracketed texts (where there is no agreement) and proposals presented in a confusing way, a 224 page official compilation  titled 'JOB (99)/Rev 3 (6986)' of 18 November, and an informal revised (secretariat?) draft ministerial text (identified as 3/12 - 0545, meaning an informal paper of 3 December at 0545 local time) whose status was challenged by many delegations.

This time at Seattle there has been no clear procedural proposal from the chair put on a piece of paper for the COW and a consensus decision on it obtained, but a mere final plenary statement on Friday night (about 11 pm local time, eight hours behind GMT) by USTR Mrs. Charlene Barshefsky, who chaired the Conference.

Contributory causes perhaps were:

* the arrogance of power of the host country and its attempts, with some secretariat help, to manipulate the preparatory processes at Geneva, and that of the ministerial meeting in Seattle - including an attempt to use the street protests to get the US view to be accepted, and the lack of even the normal courtesies and facilities of a host to the member-nations of the WTO;

Nothing illustrated this perhaps more than the fact that even the normal diplomatic practice of 'thanks to the host country' and to the 'chair', moved from the floor, were absent at the final meeting of the Committee of the Whole, and at the final open plenary when she made her closing remarks and closed the meeting.

* the ineptness, bordering on incompetence, on the part of the secretariat and its Director-General Mike Moore who even in Geneva had taken over - without a formal General Council decision - the preparatory process to push the US and EC contradictory agendas, and mistook the shadow for the substance in the 'new dynamics' of the 135-member WTO, and tried to 'win' some over by consultancies and jobs, and others by 'humour' and 'jokes'.

Mrs Barshefsky's closing remarks got some scattered applause from the delegates (and much cheering from the NGOs and from the public gallery when she admitted unbridgeable differences), and near complete silence for the remarks of the WTO head, Mike Moore.

And the large number of NGOs and others present in the hall cheered when Mrs. Barshefsky acknowledged deep differences that could not be bridged and the suspension of the conference.

So rattled was the secretariat that after having announced that a press conference would take place in the same plenary hall, the press office asked everyone to watch for the monitors, and quietly passed word to the journalists to go down two floors to a smaller press room. Many newsmen who had not been tipped off, found out and came down and found themselves excluded. Their protests at being excluded and the protests of those inside on their behalf, led to the press conference being shifted again to the plenary hall.

In any corporation, the Chief Executive Officer (CEO) would have been forced to quit even over the chaotic conditions at the conference - for delegates, ministers, media and others with official business. And a journalist suggested as much, when he referred to the failure of the conference and asked Moore at his press conference whether he should not resign or plan to quit.

Moore only said he had agreed to a 3-year contract and he always abided by his contract! (SUNS4567)

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

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