Clinton for new trade round in sectors of US dominance

The US President's proposal at the 2nd WTO Ministerial for a "new type of trade negotiations" signals his administration's intention to pursue negotiations only in US-dominated sectors while ignoring other issues of importance to developing countries. While some of his other proposals seem to be aimed at mollifying domestic lobbies, developing countries stand to lose if these proposals are realized.

by Chakravarthi Raghavan

GENEVA: US President Bill Clinton came to the WTO on 18 May with proposals for a "new type of trade negotiations" which, shorn of rhetoric and slogans for the Democratic Party lobbies, constituted a neo-mercantilist agenda of "free trade" in areas where the US is dominant.

Clinton specifically pushed for WTO members agreeing not to levy tariffs on trans-border "electronic transmissions."

The US attempt to get a separate ministerial text for standstill on "tariffs" on electronic commerce has not so far got consensus - with several nations opposing the US draft for a "standstill" that is ambiguously worded and that could be interpreted as one that needs a "consensus" at the WTO before any nation could decide to levy tariffs.

Government procurement

Clinton also called for "fair and open" bidding on government procurement contracts and supplies - putting it as part of the need to end "bureaucratic caprice, cronyism or corruption" - and asked all nations to adopt the OECD- negotiated anti-bribery convention (which conveniently excludes parliamentarians and party funding).

Both these measures would provide "investor" confidence, Clinton argued. Earlier, while he had spoken of the Birmingham G-8 summit ideas for strengthening the international financial architecture so that private capital markets could promote rapid growth, he had not mentioned "investment rules" - perhaps a signal that the US prefers to achieve these via the IMF "capital account convertibility" moves.

But for an administration enveloped in charges over party fund-raising in return for favours to donors - with everyday's newspapers bringing some fresh details or instances (from the 1996 elections) - to raise issues of corruption, cronyism or bureaucratic caprice required some straight face.

These examples have ranged from renting out (for a night) the Lincoln Bed-room at the White House for large party contributors and White House internship for children of rich donors, to rewarding corporations for donations by sponsoring their trade disputes at the WTO (as in the banana dispute with the EU) and bending rules and giving waivers for exports of sensitive technology (the day's newspapers carried the latest of these on guidance systems for satellite space launching from China).

And an even straighter face is needed for the head of a country where "pork-barrel" politics is a way of public life to call for an end to similar practices in other countries, by merely calling them cronyism.

The Clinton speech to the 2nd Ministerial Conference of the WTO here was officially one for the 50th anniversary celebrations of the multilateral trading system (MTS), and was originally planned for 20 May but brought forward to the 19th to suit the G-7, and then again to a special meeting on 18 May evening for a solo Clinton performance.

But if Clinton came for a solo performance to avoid sharing a forum with Cuban President Fidel Castro, the latter was present to hear Clinton - and the TV cameras made sure to pan him, including when he joined others in politely clapping hands at the end of the Clinton speech.

And if "popularity" and "acceptance" by others are to be judged by the extent of the applause, one of the ministers from the developing world observed on 19 May, Castro outpointed Clinton.

The US President, who flew in from London (after the US-EC summit) for a visit to Geneva of a couple of hours, before flying back to Washington, kept the ministers and delegates (who, for security reasons, had to be inside the hall an hour before the scheduled time) waiting for 45 minutes while he received the Swiss ministers in the US Embassy nearby.

Clinton's proposals

Though previewed (by accompanying White House media from the Birmingham G-8 meeting) as a speech where he would propose a new round, to be kicked off at a 1999 Ministerial which he was inviting to hold in the US, the Clinton speech proposed much less - partly, perhaps, with an eye on this November's US Congressional elections.

Clinton invited the WTO to hold its next Ministerial in 1999 in the US, asked other nations to start negotiations next year to further reduce tariffs and tear down barriers to trade, and called for a "new type of trade negotiations" so that the practice hitherto in all trade rounds of "nothing is settled until everything is settled" no longer prevails.

Such negotiations would enable the US to agree to negotiate only in areas or sectors of advantage to it and, even when there is a basket of issues, enable the US to walk away from negotiations with the concessions it is able to extract sectorally, without having to yield in other sectors.

Even more "interesting" was his mentioning the areas for new negotiations: Clinton asked that the (already mandated) agriculture negotiations be started next year and, even before they conclude, for countries to begin annually cutting tariffs and subsidies further.

He also called for rules, based on science, to encourage reaping the full benefits of bio-technology.

On the other sectoral negotiations mandated to begin in 2000, the second round of liberalization of trade in services, Clinton merely proposed that "when services negotiations are launched," it is essential to engage in wide-ranging discussions to ensure openness "for dynamic service sectors, such as express delivery, environmental, energy, audio-visual and professional services".

Clinton also asked for continuing the strong momentum to further dismantle industrial tariffs (again on a sectoral basis), beginning with chemicals and environmental technology.

In a populist move to win over his domestic environment and consumer lobbies, Clinton asked the WTO to take steps to bring "openness and accountability" to its operations - but was careful to limit it in terms of actual proposals:

  • provide a "consultation" forum where business, labour, environmental and consumer groups can speak out;

  • convene a high-level meeting of trade and environment ministers to provide strong direction and new energy to the WTO's "environmental efforts";

  • open the dispute settlement process to the public, publish promptly "briefs" filed by disputants before panels, and enable "stakeholders" to file "amicus briefs".

Dispute settlement

While the US has been demanding, and using the dispute settlement system to force its trade partners to give up environmental or consumer-driven standards (beef hormone, genetically-engineered agri-products like soya and so on), Clinton used his WTO "pulpit" to demand that international trade rules must enable sovereign nations to exercise their right to set protective standards for health, safety, the environment and bio-diversity!

This may appeal to some of the "environmental NGOs" of the North, creating a new professional class of NGO trade-law specialists in Geneva, preparing and filing briefs, and lead to powerful TNCs setting up and funding their own "civil society" organizations to do the same, in cases where their governments have not sponsored their case before the WTO.

But the Clinton proposal (which, in effect, repeats what the US delegation has been advocating) has been opposed by developing country governments and trade delegations, who are afraid that the already costly (for them) dispute settlement system would become costlier with powerful Northern lobbies ranged against them in litigation (a la the US legal system and percentage lawyers in civil damage litigation).

Third World "civil society" and "stakeholder" organizations, particularly after their Singapore experience, have also been demanding that transparency in the WTO should start at the level of the rule-making and decision-making processes, calling for an end to the cabal-like "consultations" among the handpicked few whose accords are thrust down on the majority through a so-called "transparency exercise". Southern NGOs (and even some of their governments privately) have been demanding full transparency and participation in rule-making and decision-making by their own governments - and by the public, as a start, by publishing in advance proposals in these areas to enable the public to know what their governments are being asked to do and to influence their governments.

Clinton also played to the US labour lobby by calling on the WTO and the ILO to work together more closely, respecting "core labour standards", and for the two secretariats to convene at a high level to discuss these issues.

At Singapore, where this was brought up, many developing countries rejected secretariat-level cooperation, underlining the different nature of the two secretariats and the limited role for the WTO secretariat under the WTO charter.

"New type of trade negotiations"

In calling for a "new type of trade negotiations", Clinton argued "we can no longer afford to take seven years to finish a trade round, as happened in the Uruguay Round, or let decades pass between identifying and acting on a trade barrier."

"We should explore," Clinton said, "whether there is a way to tear down barriers without waiting for every issue in every sector to be resolved before any issue in any sector is resolved", adding the fine sentiments on the need to do this in a fair and balanced way, taking into account the needs of nations large and small, rich and poor.

Given the experience of developing countries - whose identified problems and issues have been put into the "basket" of issues at every successive trade round, but without any solution and with the result that they end up merely being pushed off to a work programme and the next round - the Clinton proposal would result in developing-country issues not even figuring on the agendas or, even if they do, not being brought up for negotiations.

US officials, in briefing journalists, said that everything was on the table and nothing was blocked or agreed.

But the nuances in their interpretations suggested that while the US was for a new round of negotiations on a range of issues to be taken up, in fact it wants to clinch accords and have them approved and implemented.

After a meeting of the Quad countries (Canada, the EC, Japan and the US) in April, it was reported that the Quad had more or less agreed that while a range of issues would be included in the negotiations, if an agreement was reached in two or more sectors, it would be accepted and implemented, without waiting for agreement on an entire package.

And while Clinton has proposed taking up and further dismantling industrial tariffs for negotiations, but specifying only chemicals and environmental technology, US officials, in briefings, sought to give the impression that the entire range of industrial tariffs could be negotiated.

But they seemed to hedge their bets when it was suggested that this should mean negotiating on tariffs on textiles and clothing and other export products of interest to the developing world for which the average tariffs are high and tariff escalation is higher. (Third World Economics No. 184/185, 1-31 May 1998)

Chakravarthi Raghavan is the Chief Editor of the South-North Development Monitor (SUNS).