Reform of WTO functioning on the agenda?

When the World Trade Organization sits again in the New Year, it will have the chance to discuss some much-needed reforms to its system of decision-making. The WTO Director-General promised to look into the matter after numerous complaints by delegates, NGOs and the media about the "untransparent" and non-participatory manner in which the WTO Conference was run.

by Martin Khor

PENANG: When the WTO General Council meets again in Geneva in the New Year, Members will have an opportunity to review the way the organization functions, particularly how negotiations are run and key decisions taken.

At the end of the WTO's first Ministerial Conference in Singapore, the Director-General Renato Ruggiero and Conference Chairman, Singapore Trade Minister Yeo Cheow Tong, both promised that the WTO would discuss how its decision-making process could be improved and made more transparent.

They were responding to protests from several Ministers and delegations from developing countries, as well as from NGOs and the media, about the lack of transparency and participation, including of most WTO Members, at the Conference.

"Transparency with efficiency"

"We shall need to improve the procedures to be applied in the next Ministerial Conference," Yeo said, in apologizing for the lack of consultation, in his concluding speech.

At a closing press conference, Ruggiero said the 50th anniversary celebration of GATT next year would be a good occasion to address the question on how to "join more transparency with efficiency...We have to face it even though it is a difficult issue."

Reform of the way business is done at the WTO is therefore on the agenda. Or it should be, anyway.

One of the positive results, albeit unintended, of the WTO's first Ministerial Conference was that it opened the eyes of Trade Ministers, senior officials, NGOs and the world media as to how the two-year old organization is run.

They may have heard before, from their Geneva colleagues, about the untransparent and undemocratic nature of the creature. Now they know, for they experienced it for themselves in Singapore.

Whilst the Ministers made set-piece speeches in a huge and practically empty hall, in what became something of a ceremonial farce, the real intense negotiations on the future agenda of the WTO was carried out in an "informal group" of 30 countries.

As far as could be gathered, those participating in these consultations included: the four Quad members (Canada, the EC, Japan and the United States), Norway, Switzerland (from non-EC Western Europe), Hungary and the Czech Republic (from East Europe); Egypt, Morocco, Tunisia, Nigeria, South Africa and Tanzania (from Africa); Bangladesh, India, Indonesia, Malaysia, Pakistan, Singapore, South Korea and Hong Kong (from Asia); Argentina, Brazil, Chile, Colombia, Cuba, El Salvador, Jamaica and Mexico (from Latin America and Caribbean).

The participants were "invited" by the Ruggiero and Yeo. How the selection was done and why, no one was told. Even the composition of the group was not announced. Minutes of the proceedings, if any, will presumably never be made public.

But one trade official said the criteria for selection was probably to include some of the key countries with some trade and economic weight, without whose support no accord could be reached, as well as those who have a "nuisance value" - in that their delegations would create problems at the final informal plenary meetings, if they had been excluded.

One obvious lesson seems to be that a country had to create "nuisance value", should it want to be included in such a group in future.

South being under-represented

Whilst developed countries were well represented in the group, developing countries were under-represented, considering that they form four-fifths of the WTO membership.

Ministers and officials of most developing countries were not privy to what was happening, and were kept as much in the dark as the media and NGOs, and were getting more angry and frustrated as the week progressed.

While some of those excluded sat around waiting in their hotel rooms, a few hung around the area where these consultations were being held, to keep track of what was going on. One or two non-invited delegations just "gate-crashed", insisting on their right to participate and know what was going on.

Finally, all the delegates were asked to assemble for an "informal plenary" the night before the Conference concluded. At that meeting, Chairman Yeo appealed to them to endorse controversial parts of the Declaration on which the informal group had reached agreement, without reopening the texts for discussion.

Several delegations from developing countries spoke up about the shabby way in which they had been treated, and complained about the lack of transparency and participation at the Conference.

But none of them chose to assert their "rights" in the only way that make the "power-brokers" take notice - ignore the appeals to remain silent, and open up discussions on the texts.

One long-time trade observer said, if these countries and delegates did not want to be `identified' (or frowned upon) for asserting their rights, no amount of complaining could ensure their participation in decision-making.

"Developing countries expressed their concern over the lack of transparency of the process," WTO spokesman Keith Rockwell said at a midnight press briefing after the session. "The Director-General and the Chairman agreed to look into their concerns and promised to see how the WTO could be more transparent without compromising efficiency."

The transparency issue

To a question on the transparency issue, Rockwell said that with 127 members in the WTO, it was difficult to get them all to draft the Declaration. "The Chairman and Director-General put together a group balanced according to geography. There is an acknowledgement it is difficult to strike a balance. The Director-General is trying to find a way, without hindering a process that's complicated."

Another journalist commented that many people, including the Ministers and diplomats, the NGOs and media, were all complaining they did not know what was happening at the Conference. He asked Rockwell to elaborate which countries had complained at the meeting and how would the Chairman and Director-General bring about a more transparent process in the WTO in Singapore and after.

Rockwell's reply was that "to the first question, you have answered it yourself, and to the second question, it has not been worked out yet." To which, the journalist responded: "This is not a very transparent answer."

The irony was that Ruggiero, when he took office in May 1995, announced that one of his tasks would be bringing greater transparency into the system. In practice, under his leadership, the system has become more non-transparent.

At the start of his Chairman's concluding remarks at the Closing Session, Yeo made a reference to the participation issue. "Due to the lack of time, I regret not having been able to consult with each of you at every stage. Our approach has been empirical. We shall need to improve the procedures to be applied at the next Ministerial Conference."

The issue of transparency, and the lack of attention paid to concerns of developing countries at the Conference, re- emerged prominently at a press conference held by Yeo and Ruggiero after the Conference concluded.

The press conference began with Yeo and Ruggiero in high and celebratory spirits on what they thought was a greatly successful meeting, but they were soon swamped with questions about the Conference's lack of transparency, the marginal role of developing countries and the WTO's "rich men's club" image.

Calling the Conference a "resounding success," Yeo said it had covered the implementation and review of the Uruguay Round and also focused on a forward programme of the built-in agenda, thus "paving the way forward to the next Round at the turn of the century."

Yeo said the Conference had also resolved four divisive issues in a spirit of compromise.

A jubilant Ruggiero also termed the Conference a "great success", with all the objectives attained, great unity of the Members and participation of the LDCs. "We have problems of marginalization, we have to fight it through further liberalization," he said. "We adopted an ambitious work programme. We have recognition of the primacy of the multilateral system versus the regional system." With the liberalization of information technology, "we can have a phone in every village." There was, he said, cause for "high celebration."

Problems of implementation

Questions from the journalists brought the mood much closer to the ground.

A journalist asked how much discussions were really on problems of implementation and of developing countries, since most of the Conference time had been spent on the new issues and on the information technology agreement. He also asked Ruggiero to explain the discrepancy between his statement that world trade had grown at the fastest rate of 8 per cent in 1995 whilst the WTO's own annual report (released at the Conference) showed a deceleration of growth to only 5% (which Ruggiero had failed to mention).

Ruggiero replied that although the informal meetings focused on unresolved new issues, the implementation problems were raised by Ministers in their speeches. He however admitted that the implementation problem "was not discussed but has been considered...We have noted the contents and we'll make an analysis."

On the Least Developed Countries (LDCs), he said there had been participation of LDCs in the deliberations and need for discussion on how to improve it. "We made a step forward. Zero tariff for LDC products has not been agreed to, but a move towards it has been accepted." On the contrast between his and the WTO report's figures on trade growth, Ruggiero, who was visibly uncomfortable, said even though the rate of growth (in 1996) was lower, it was still higher than a decade before.

A question was asked, how much confidence was there about there being a next Round of trade talks at the end of the century (that Yeo had referred to) and what would be the key issues.

Ruggiero noted that after the Uruguay Round, many countries may be tired of more Rounds, but that the in-built agendas for existing agreements (on TRIPS, services and agriculture) call for reviews or new negotiations by the turn of the century. He the suggested that `by then, perhaps studies on investment and competition will be ready for negotiations.'

This contrasts with the view of many developing countries at Singapore that they did not want to see the study process on investment and competition turn into negotiations for multilateral agreements.

Another journalist referred to Yeo's closing statement on the need to improve procedures at the WTO and to the call by NGOs for the WTO to be more transparent and democratic, and asked whether reform in that direction would be part of the WTO's future work programme.

Yeo replied "we tried to achieve the maximum (participation) possible," through Ministers expressing their views at the plenary, and at the plenary heads of delegations process. There were discussions on a bilateral and plurilateral basis. "We do admit no process is perfect especially since we had very limited time and yet a large number of members. We achieved that process well, judging that we got consensus when we presented the final draft."

Ruggiero replied that in 1997 there would be a high profile celebration of the 50th anniversary of GATT, and this would be a good occasion to see how the WTO could approve a change, to "join more transparency with efficiency." He added: "We have to face it (transparency and participation), even though it is a difficult issue."

To another question on lack of transparency, the problems faced by developing countries in coping with yet new issues just approved by the Conference, and the need to prevent WTO from being a "rich men's club", Yeo said that in the Singapore Conference "we tried to take in a cross-section of views." He admitted, however, "that it was not a perfect process, so there is a need to improve."

On the increased work load, Yeo pointed out that there was a new paragraph in the Declaration recognizing that smaller countries had problems of lack of resources. Referring to it (para 22), Yeo added: "We must make sure that the decisions from this Conference does not impose additional burdens on them. Therefore, in Geneva, there will be no more than three to four meetings a year on investment, competition and government procurement. Also, since developing countries lack expertise, the WTO will have a technical assistance programme for them."

Ruggiero said it was a "big mistake" to consider the WTO a rich men's club as 80% of members and all 28 candidates are developing countries. "The real value of WTO compared to other organizations is the active participation of developing countries."

The issue of participation

Yet another journalist came back to the participation issue, which by now had dominated the press conference. Referring to Ruggiero's statement on the need for WTO to combine more transparency with efficiency, and to Yeo's remark that maybe the WTO needed a different way of operating than at the Ministerial Conference, he asked what were the options, and whether the WTO should adopt the model of the UN Security Council (which Ruggiero had been quoted as putting forward, in a recent news article in the Wall Street Journal).

Ruggiero replied that there was an awareness of the need to improve the WTO's way of functioning. "It is difficult to consult everyone all the time," he said. He added that the day before, at the Conference, a Minister of a developing country had not been satisfied (with the system of participation) and had suggested the possibility of a sort of "grouping system", in which countries could form into groups by region or some other basis, with nominated coordinators. On the Security Council model, Ruggiero implied he had not been correctly quoted.

In the final question, a journalist commented that agriculture and textiles were difficult issues, and that Ministers of developing countries had raised them as matters of priority to be cleared up at Singapore. "So why was so little time spent on matters in which developing countries have an interest?"

Ruggiero's short reply was: "Because there was agreement."

Before the Singapore Conference, many developing countries had already registered their frustration at the untransparent and undemocratic manner by which the preparatory process for the Ministerial Conference was being conducted, and in particular, the so-called HOD or heads of delegations informal process, led by the Director-General, for determining the new issues and the draft Declaration.

At Singapore itself, that dissatisfaction increased manifold and extended from the Geneva diplomats to Ministers, other members of the delegations, the NGOs and the media.

Even if the Ministers and their officials confined most of their grumbling in private, journalists from many countries filed reports on the lack of transparency and the marginalization of developing countries that they had witnessed.

And the NGOs present strongly voiced their anger. The whole range of NGOs, from development groups like Third World Network and Oxfam, to environment groups like Greenpeace, Friends of the Earth and World Wide Fund for Nature, to consumer groups like Consumers International and trade unions such as the Organization for Africa Trade Unions, condemned the whole process as well as the substantive outcome of the Conference.

"We came here to lobby for greater transparency and participation of NGOs in the WTO," said a leading NGO activist from a developing country. "But we found that most of our Ministers and officials knew as little as we did, and had even less to do than the NGOs. We at least had our full agenda of activities, and often we had even more information than our Ministers."

"So we ended up lobbying that our own Ministers and governments should have the right to know and to participate in the WTO! And this reflects the whole irony and tragedy of the WTO. We had to come to the WTO Conference in Singapore to find that out! Having found that out, we will go back and campaign to change this terrible situation..."

Despite the self-congratulatory satisfaction of the organisation's top management and the major countries, which in their own words achieved all their objectives in Singapore, the WTO's credibility and legitimacy has suffered a major blow where the public groups are concerned.

At a briefing to the NGOs near the end of the Conference, Chakravarthi Raghavan, Chief Editor of the South-North Development Monitor, said in his 18 years experience of following the GATT at Geneva, he had never found such utter lack of transparency as what exists now. "The lack of transparency and democracy in decision-making had made the WTO and its agreements illegitimate," he remarked. "No institution or instrument lacking legitimacy can command or expect obedience or acceptance of civil society." NGOs of all hues and interests should join in fighting this, and must beware of efforts of the WTO system to co-opt them in peripheral activities.

For many developing countries, their faith in being able to really participate as members (and to avoid being manipulated by the majors and be used as rubber-stamps to produce "consensus" against their own interests) has also been shaken.

If it is to regain some of that credibility, legitimacy and faith, the WTO has to seriously tackle the issue of transparency of information and process, and participation of all Members, big or small, when it sits again to follow up on its decisions in Singapore.

Will it be up to the challenge, in the coming 50th anniversary year of the founding of GATT, its predecessor? Or will it be "business as usual", with the Quads making the blueprints, drawing the policies, and through persuasion and pressure, with the help of the Secretariat, and via the secretive "Green Room informal meetings", keep on producing the "consensus" to advance the cause of their global economic governance? (SUNS3896)

Martin Khor is the Director of Third World Network.The above first appeared in the SUNS of which Chakravarthi Raghavan is the Chief Editor.