All aboard on the WTO ship?

All the new issues initiated and vigorously promoted by the North, with the aid of the WTO Secretariat, have been recognized in the Declaration adopted by the WTO Ministerial Conference, despite the resistence to these topics by many developing countries, during the long preparatory process in Geneva. The labour standards issue was mentioned in a general part of the Declaration, which later agreed to establish new working groups for investment, competition policy and government procurement, and to start work on trade facilitation.

by Chakravarthi Raghavan

SINGAPORE: The first Ministerial Conference of the World Trade Organization has taken on board the new issues and proposals for a future trade agenda, though in language that is capable of some differing interpretations and disputes in the months ahead.

Of the new issues, those that received considerable media attention and controversies were 'trade and investment' and 'labour standards'.

On Labour Standards, the Ministers said in their Declaration:

"We renew our commitment to the observance of internationally recognized core labour standards. The International Labour Organization (ILO) is the competent body to set and deal with these standards, and we affirm our support for its work in promoting them. We believe that economic growth and development fostered by increased trade and further trade liberalization contribute to the promotion of these standards. We reject the use of labour standards for protectionist purposes, and agree that the comparative advantage of countries, particularly low-wage developing countries, must in no way be put into question. In this regard, we note that the WTO and ILO Secretariats will continue their existing collaboration."

Both at the informal heads of delegations (HOD) meeting on 12 December night, and at the formal open plenary on 13 December (repeated at the insistence of some delegations, including Pakistan), the Chairman of the SMC, Yeo Cheow Tong, set out some 'assurances' about the para on labour standards.

Elements of text on labour standards

The text, he said, embodies some important elements:

First, it recognizes that the ILO is the competent body to set and deal with labour standards.

Second, it rejects the use of labour standards for protectionist purposes. This is a very important safeguard for the Multilateral Trading System, and in particular for developing countries.

Third, it agrees that the comparative advantage of countries, particularly low-wage developing countries, must in no way be put into question.

Fourth, it does not inscribe the relationship between trade and core labour standards on the WTO agenda.

Fifth, there is no authorization in the text for any new work on this issue.

Sixth, "we note that the WTO and ILO Secretariats, will continue their existing collaboration, as with many other intergovermental organizations. The collaboration respects fully the respective and separate mandates of the two organizations."

At the HOD meeting, Yeo said that the Director-General had explained that this colaboration takes place in a routine way, as with many other international organizations through exchange of information and through WTO Secretariat staff participating as observers in certain ILO meetings. The collaboration respects fully the respective and separate mandates of the two organizations, and it does not permit the WTO Secretariat to venture into new areas or issues.

In the informal consultations that negotiated the text on this (with at one stage, consultations among a smaller group of countries), several of the developing countries who were resisting the issue sought explicit inclusion of language about the ILO-WTO cooperation to be 'within existing collaboration'. Some of them said they wanted to make sure that Ruggiero and Michel Hansenne (the ILO chief) do not launch their own agendas and programs.

In an obvious reference to the tussle in the consultations on whether the labour standards should be in the Declaration or in the Chairman's summary, Yeo said there had been 'extensive discussion' on whether this text should go into the Ministerial Declaration or the Chairman's concluding statement.

"Representatives of both developing and developed countries feel that since this text is of crucial importance and contains many important safeguards of both their interests, it is preferable to have it in the Ministerial Declaration than in the Chairman's Concluding Statement.

"A Chairman's text," Yeo underlined, "does not have the political force of a Ministerial Declaration. Unlike a Chairman's Statement, a Ministerial Declaration represents the collective will and commitment of our 127 Members. It is an authoritative document which can be invoked for future reference."

At the open plenary, Yeo added: "Some delegations had expressed the concern that this text may lead the WTO to acquire a competence to undertake further work in the relationship between trade and core labour standards. I want to assure these delegations that this text will not permit such a development."

Within the consultations, after a text was formulated, India and a few others felt 'safer' with its being part of a Declaration, whereas Pakistan and Egypt held out for its inclusion only in the Chairman's text. It was finally put in the Declaration, on the basis of Yeo making further clarifications about the para not alllowing for any future work programme at the WTO.

The Yeo view and assurances, and interpretations, may be one way of looking at the outcome.

But another view was taken by Charlene Barshefsky, the acting US Trade Representative. At a press briefing, she noted that no one has been able to prevent any issue from being raised by Ministers at the old GATT or the new WTO meetings.

When the Uruguay Round was concluded, the WTO was described by the then Director-General Peter Sutherland as having created a permanent negotiating forum, which did not need special Ministerial meetings and trade rounds to initiate negotiations, including on new issues.

A developing country trade official said: "From now on we will be under perpetual pressure from the developed world to make more and more trade concessions."

The developing countries seem to face such a prospect on anything that the North wants - until they are able to unite and take a stand.

As another US trade official, Jeff Lang noted, the US has been trying to raise the 'workers rights' issue since the Eisenhower administration days. At Punta del Este, it was mentioned in the Chairman's closing statement as one of the issues that could not achieve a consensus, but could be pursued through the GATT machinery. At Marrakesh, something similar took place. Now the issue has been placed in the Declaration.

Notwithstanding the assurances of Yeo and others, at some point (perhaps in 2005 when the Multi Fibre Arrangement has been phased out and all the textiles and clothing quotas in the North would have to end) the US or some other country (even a developing country) might try to activate the issue.

Investment and Competition Policy

On Investment and Competition, the Declaration said: "Having regard to the existing WTO provisions on matters related to investment and competition policy and the built-in agenda in these areas, including under the TRIMs Agreement, and on the understanding that the work undertaken shall not prejudge whether negotiations will be initiated in the future, we also agree to:

* establish a working group to examine the relationship between trade and investment; and

* establish a working group to study issues raised by Members relating to the interaction between trade and competition policy, including anti-competitive practices, in order to identify any areas that may merit further consideration in the WTO framework."

"These groups shall draw upon each other's work if necessary and also draw upon and be without prejudice to the work in UNCTAD and other appropriate intergovernmental fora. As regards UNCTAD, we welcome the work under way as provided for in the Midrand Declaration and the contribution it can make to the understanding of issues. In the conduct of the work of the working groups, we encourage cooperation with the above organizations to make the best use of available resources and to ensure that the development dimension is taken fully into account. The General Council will keep the work of each body under review, and will determine after two years, how the work of each body should proceed. It is clearly understood that future negotiations, if any, regarding multilateral disciplines in these areas, will take place only after an explicit consensus decision is taken among WTO Members regarding such negotiations."

At a press briefing on 12 December night, the WTO spokesman, Keith Rockwell said, the study on trade and investment would be within the TRIMs framework.

But whether the majors, and particularly the EC, Japan and Canada, will allow it to be within this framework will be seen only when the General Council sets up the working group and sets its terms of reference. If the same language is used, as in the Declaration, this controversy will arise in the study process.

The assurances about the study not prejudging negotiations, or the requirement that explicit consensus is needed for negotiations, could prove to be mere words. This was brought out at a post-Conference press briefing, where Ruggiero in trying to downplay Chairman Yeo's remarks about a new trade round in 2000, created more doubts.

He noted that negotiations on agriculture and services, and review of the TRIPs (about plant protection), as part of the built-in agenda was due in 2000. It was possible, he said, that investment and competition policy might also come up for negotiations then.

He could have been referring only to the TRIMs provision in Article 9, but he could also have meant something else, such as the work of the new investment working group.

The working group on competition is supposed to study the issues raised by Members (which by implication includes the rules on anti-dumping, subsidies, and Restrictive Business Practices of TNCs, raised by developing countries). However, at her press conference, Charlene Barshefsky said, the US is going to insist that only anti-monopoly issues (that aspect of competition policy relating to opening up of markets abroad) are discussed, and its own laws (meaning on anti-dumping and subsidies and countervailing duty measures) are not on the table for discussion.

On transparency in Government Procurement practices (proposed by the US), the Declaration agrees to: "establish a working group to conduct a study on transparency in government procurement practices, taking into account national policies, and, based on this study, to develop elements for inclusion in an appropriate agreement."

On the other new issue of trade facilitation (brought up by the EC), the Declaration said: "(We) direct the Council for Trade in Goods to undertake exploratory and analytical work, drawing on the work of other relevant international organizations, on the simplification of trade procedures in order to assess the scope for WTO rules in this area." (SUNS3892)

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