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INVESTMENT, COMPETITION NOT RIPE FOR NEGOTIATIONS, SAYS US

by Chakravarthi Raghavan


Geneva, 14 Oct 99 -- Investment and Competition Policy issues are not ripe for negotiations at the World Trade Organization, the United States Ambassador, Mrs Rita Hayes said Tuesday at the informal General Council (GC) heads of delegation (HOD) meeting discussing the first draft of a Chairman's text of a draft Ministerial Declaration for Seattle.

The informal HOD process at the GC began Tuesday on the basis of the Chairman Amb. Ali Mchumo's first draft with an addendum, incorporating within square brackets, two sets of proposals of several developing countries on implementation questions to be addressed, one before and at Seattle, and the other, in the first year of negotiations.

The HOD meeting continued in the afternoon, and was due to resume Wednesday. The HOD is set to discuss Thursday the implementation questions and issues. Delegations were at this stage making some general comments and outlining their views in broad terms. A drafting and negotiating exercise is expected to begin after the Chair, in the light of the views and comments heard, puts forward a revised text. The Chairman indicated that he would try to produce a revised text perhaps by Friday or over the weekend.

In the resumed HOD meeting Tuesday afternoon, Bolivia said that something was needed to be done in agriculture to open markets for the exports of developing countries. As for liberalisation in non-agricultural products, it was not a demandeur.

Pakistan said that the references in the part relating to objectives, along with the objective of 'sustainable development' must figure the objective of 'sustained economic growth'. This had been the subject of considerable discussion and negotiations that was reflected in the final outcome of the Geneva Ministerial Meeting and should find a place in the document.

Later, in its intervention, India strongly supported this view.

Pakistan also wanted the formulation about the new round of negotiations being a 'single undertaking' be placed within square brackets (indicating lack of consensus), and there should be clarification about the matter. There should also be a ranking of subjects and priorities for negotiations. Pakistan could not see a special role for the Committee on Trade and Environment and Committee on Trade and Development in the negotiating process.

For Pakistan, as for other developing countries, the implementation issues was of particular priority and importance.

Egypt's Amb. Fayza Adoulnaga, commended the Chair for the addendum to the first draft on implementation and said that without it, it would have been difficult to accept the draft as a basis for discussions. The Singapore issues should not be considered as ripe for negotiations and put in the items under subjects for negotiations. As for coherence, Egypt drew attention to the 1994 Marrakech declaration on this, and the views of African Ministers at Algiers recently, namely that the coherence issue was to be linked to the international financial institutions.

[The draft text calls for a Working Group on Coherence and would invite for its work, representatives of the IMF, World Bank and other relevant international organizations. This is viewed by many developing countries as opening the door to bring in the ILO, UNEP and other bodies and their remits into the WTO under the umbrella of  'coherence'.]

Hungary, speaking on behalf of CEFTA countries and Latvia expressed concerns over the agriculture formulation - concerns which were close to those of Europe, Norway, Switzerland, Japan and South Korea.

Mexico's Amb. Alejandro De La Pena, saw the document as a good basis for discussion, and said there should be clear formulations on decisions to be taken at Seattle.

India's Amb. S. Narayanan, commended the Chair for having put forward the addendum to the first draft, and said that this met Indian concerns about the imbalance in the draft. India supported Pakistan's views on including 'sustained economic growth' along with 'sustainable development' among the objectives and priorities. India also supported Cuba's view that the draft should have a specific formulation against unilateral trade actions. The objectives should also stress the importance of "economic growth with equity".

The section about the evaluation of the existing agreements and decisions needed further elaboration. India endorsed the presentation, by Hong Kong China's Stuart Harbinson, on behalf of the textiles and clothing exporting countries, members of the International Textiles and Clothing Bureau (ITCB), critical of the present para 20 of the text, and elaborating the measures that need to be taken by the importing countries maintaining restrictions on imports from the developing world. The present para 20 (a mere redraft, reflecting a US view of Art.7 of the ATC) must undergo radical changes to convey effectively, the developing countries concerns on implementation in this area.

India was concerned about the title "New Negotiating Round" and said it was best to change it into "New Negotiations".

There should be square brackets placed around the formulation in the text (para 25, first bullet) about the next round being a 'Single Undertaking', a phrase being interpreted differently by different delegations. He had asked sometime ago that the secretariat should provide a note on the legal implications of this term. In the Uruguay Round, this phrase implied some kind of a political commitment, but acquired a different connotation by the time it ended.

India would have serious problems in agreeing to the formulation that "the results of the negotiations shall be adopted in their entirety and applied to all WTO Members", when they had not even decided on an agenda. India would agree with Brazil for deletion of the last sentence of that para about 'early agreements'.

[The text provides that "the launch, conduct and conclusion of the negotiations shall be treated as parts of a single undertaking." It then goes on to add (and thus prejudge or preordain the outcome): "The results of the negotiations shall be adopted in their entirety and apply to all WTO members."]

India also questioned the idea of establishment of a Trade Negotiations Committee, under the authority of the Ministerial Conference, to run the negotiations, and said: "We are proceeding on the basis that there is no difference between GATT and WTO, which is rather regrettable. The WTO is a permanent forum for negotiations and the Ministerial Conference is the highest body in the WTO. When the Ministerial Conference is not in session, the General Council has all the powers of the Ministerial Conference. Establishing a trade negotiations committee with the object of entrusting it with a function which is legitimately that of the General Council would amount to amending the treaty provisions. The legality of establishing a TNC, after the advent of the WTO as an organisation, has to be examined carefully before we take a final view in the matter."

He also questioned the idea of the Committee on Trade and Environment providing inputs to the negotiations and said he did not like it at all.

As for agriculture, Narayanan said that several of India's non-trade concerns - poverty alleviation, food security, rural employment - had not been reflected in the formulations.

In the case of services, the formulation had omitted reference to the concept of progressive liberalisation of services, that was used to persuade developing countries as a subject for negotiations during the Uruguay Round despite the fact that developed countries had enormous competitive advantage over developing countries. There was also a complete omission of para 3 of Art 19.

[ Art.19.3 provides for establishing negotiating guidelines and procedures, before each round of negotiations, and for the GATS Council to carry out an assessment of trade in services in overall terms and on a sectoral basis, with reference to the obligations of the Agreement including those in para 1 of Art.1V for negotiated commitments to enhance increased participation of developing countries in the services trade.]

While it recognized that the entire services formulation is within square brackets, India was concerned about the last sentence of that para which gave an unfortunate impression that the present GATS was not legally consistent. The sentence seemed to make a reference to the proposals of a few delegations (the US has made such a proposal) to change the architecture of the GATS agreement (for a top-down approach of its applicability to all sectors, except those specifically excluded by a Member) and despite the fact that more than 20 delegations had spoken firmly against changing the architecture of GATS.

The text, after formulating the agriculture and services paragraphs, should have a section related to the mandated negotiations in the area of geographical indications. In India's view both Art 23.4 and Art 24 of TRIPS fell into the category of mandated negotiations.

The language about contingent trade remedies mentioned in the first bullet under para 26 should be replaced by a more understandable language.

India did not also agree to the formulation in para 54 about coherence, where there is a reference to proposals by the Director-General, as apart from those by members. "It is not in keeping with the dignity of the office of the DG to ask him to make proposals," India said, adding that "it may not be consistent with the member-driven nature of the WTO. The current practice is that the DG reports to Members after the meeting with the World Bank and IMF, and members offer their comments. It is for Members to make proposals."

As for actions in favour of LDCs to be taken at Seattle, India had always been supportive of the concept. But all through the discussions on this, the understanding had been that this obligation for duty free entry to LDC exports would be undertaken by developed countries and advanced developing countries. It was necessary to reflect this appropriately.

There was also some confusion caused by the structure of the text, in the mention of  the same issues as 'subjects for negotiations', and for further study, elsewhere in the text -- a reference to the Singapore study issues of investment, competition, transparency in government procurement and trade facilitation. The Chairman's purpose in formulating a text, namely to be a vehicle for narrowing down differences, would be better served by adopting a methodology by which each subject, say investment, appear only in one place, with all proposals and options listed in square brackets under it. The para 9 of the Geneva Declaration had a clear structure and that should be followed. India agreed with Indonesia that the Singapore issues were a separate category and could not be given the same status as mandated negotiations in agriculture and services.

While India would make more detailed suggestions Wednesday, the Chairman should revise his draft on the basis of comments and present it in such a way as to provide a balanced presentation of various views and positions. Only such a text could further the objectives of consensus building.

The new text that the Chairman will put forward should clearly specify the portions where there was no consensus. India could not understand the concept (put forward by Switzerland) of "emerging consensus."

Narayanan also raised doubts about the 'standstill provisions' and said that the provision that no measure inconsistent with WTO will be taken had no meaning, since it was obvious if such a measure was taken, the member would face dispute settlement proceedings. During the Uruguay Round, this was not really observed. "If members are not going to observe such a standstill, what was the point of including it in a declaration," he asked. The language appeared to have been borrowed from the Punta del Este Declaration on the Uruguay Round. But he understood that in fact these commitments were not honoured and the surveillance mechanism did not achieve much. Anything included in the Declaration should have a serious purpose and not have a "casual approach"

Mrs. Rita Hayes for the US said much work remained to be done, and the text on objectives and priorities needed to be substantially tightened up and made clear, as this was a part addressed to the general public.

On implementation, Hayes wanted a separate General Council meeting on this, arguing the need to be "realistic". It would be unrealistic to expect to agree to changes in the agreements at Seattle, she said.

Most of the implementation proposals required changes or revisions in the agreements and the US will see whether they were justified. The WTO and its agreements was a single contract with a delicate balance and the US would be concerned over efforts at a whole-sale renegotiation of the agreement. However, the US was willing to look at legitimate implementation problems and would support solutions to real problems.

The US said it was difficult for members to embrace the concept of single undertaking without knowing the scope of the negotiations. The US agreed with India about the standstill provision and its inclusion in the draft.

The US wanted a trade negotiations committee with a limited number of negotiating groups. On agriculture, the US supported the view (of Australia and Cairns) that it lacked many details. The US was opposed to the concept of 'negative AMS calculation' (proposed by a number of developing countries). The US thought the formulation under further services negotiations was the least controversial. The US was pleased with the idea of setting benchmarks for the services negotiations. The provisions about market access for 'non-agricultural products' was reasonably satisfactory to the US, which however, wanted some reference to the APEC recommendation for 'accelerated tariff negotiations'.

The US did not also see any compelling reason to renegotiate WTO rules and did not think that investment and competition issues were ripe for negotiations. As for transparency in government procurement and trade facilitation, the US supported an agreement on these at Seattle, but not involving any 'market access'.

The two agreements for transparency in government procurement and trade facilitation, the EC's own internal papers show, are aimed at getting agreements at the WTO leading ultimately to full market access to the developing countries and their trillions of dollars worth of government procurement, at various levels of government. Even some US discussions with its own enterprises suggest that this is also a US objective, but not an immediate one. (SUNS4529)

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

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