A Third World Network Report (December 2000)
THE SITUATION AT THE WTO A YEAR SINCE SEATTLE
By Martin Khor (Director, TWN)
Part I: The Divisions at Seattle
One year has gone by since the World Trade Organisation's Ministerial Conference collapsed at Seattle in December 1999.
In large part, the failure of the Seattle meeting to reach a conclusion was due to deep divisions between developing and developed countries.
The developing countries had become disillusioned with their lack of export benefits from their WTO membership (as markets in the North remain protected, especially in agriculture and textiles and through barriers such as anti-dumping measures).
They were also encountering serious problems implementing their obligations in various agreements such as agriculture, TRIPS (intellectual property), TRIMS (investment measures), and subsidies. However, their requests before and at Seattle to have the WTO agreements reviewed were not taken seriously.
Instead, developed countries wanted to introduce new subjects into the WTO, such as an investment agreement, transparency in government procurement, competition, labour standards, rules relating to the environment, a biotechnology working group. They also wanted to launch a "comprehensive" New Round to bring these issues inside. Only through such a Round would they consider the developing countries' requests for a review of existing rules.
Many developing countries felt a review must come first, to correct the WTO's serious imbalances, and rejected the New Round which would make the WTO even much more imbalanced. At Seattle, the undemocratic procedures also angered developing countries, many of which made clear they would not agree to a Declaration in which they had little part in negotiating. The meeting collapsed without a Declaration.
Meanwhile, five years after the WTO's establishment, many NGOs had also learnt about the negative effects the WTO is having on development, sovereignty, food security, the environment and livelihoods. Their protests on the streets of Seattle marked a turning point in public awareness and expression on the kind of globalisation promoted by the existing WTO rules and system.
Part II: The Situation In the Year Since Seattle
After the Seattle debacle, the developed countries and the Secretariat said they would improve the WTO's performance and battered image through 'confidence building measures'. This implied that the grievances of developing countries would be taken seriously.
But one year later, there has been little or no progress, and the situation has not improved or has worsened.
* 1. The major developed countries have not shown any seriousness in addressing the plight of developing countries and turned away their continuing appeals for reviewing the WTO agreements.
The WTO has been holding special General Council sessions to deal with 'implementation issues', (i.e. the problems faced by developing countries in implementing the WTO agreements), and many developing countries have put forward clear requests and demands for reviewing several WTO rules.
But these have met with either no response or a cold response from the developed countries, which have chosen to adopt the position that the agreements are legally binding and once signed cannot be changed, and any problems can be looked at only in the context of a new round, including new issues that would involve new commitments and obligations.
* 2. Since the 'grace period' or the transition period (during which developing countries do not yet have to fulfil their obligations) for some agreements (such as TRIPS and TRIMS) have expired at the beginning of 2000, the negative effects of having to implement the flawed agreements are beginning to 'bite' painfully, and the ill effects will worsen as the implementation proceeds in the months and years ahead.
* 3. Developing countries had asked that during the present period when the implementation issues are being discussed, developed countries should not take them to a dispute panel for not following certain rules. Although the developed countries had at one stage seemed to agree to such a 'moratorium,' in fact more and more cases have been brought against some developing countries.
This has caused developing countries to be even more disillusioned, and has added to the breakdown of the 'confidence-building process.'
* 4. The concerns of many developing countries and of NGOs that the WTO rules will lead to a wide range of serious problems have not been addressed. These problems include: threats to livelihoods of farmers and workers, threats to the survival of small farms and small enterprises, threats to food security and national sovereignty, misappropriation of the traditional knowledge of local communities through 'biopiracy.' There has been no sincere attempts by the major powers to deal with these serious issues.
* 5. Instead the major powers have been intensifying their efforts once again to launch a New Round through which to forge more agreements in new areas such as investment, government procurement, competition, labour and environment. The US and EU are trying to bridge their own differences and once they succeed in doing that, they will use their combined might to push a New Round launch onto other countries, as early as 2001 when another WTO Ministerial is scheduled.
* 6. The major powers have also increased the pressures on developing countries to take on new onerous obligations on these 'new issues' through regional arrangements such as APEC, AGOA (the US Africa Growth and Opportunity Act) and through bilateral trade agreements.
* 7. The present agriculture negotiations at the WTO have not produced any positive results. Farmers in developing countries are facing threats to their livelihoods as cheaper imports flood their markets. Developed countries have not responded to the call by many developing countries that they be allowed to take measures to control food imports or to increase domestic subsidies to food-producing farmers. Moreover, developed countries show no signs of being willing to reduce own very high subsidies and tariffs. Indeed the total value of agriculture subsidies of OECD countries has gone up in recent years.
* 8. At the current services negotiations, intense pressures are being put by developed countries to have all countries accelerate their liberalisation. They are using concepts such as 'domestic regulation' and methods such as reclassification of services, and the "cluster approach" to reduce the ability to governments to regulate their services sector. Several NGOs have also voiced concern about the intrusion of the WTO into national policies on essential services such as health, education and provision of water, and they want these sectors to be 'off limits'; but the negotiations continue to treat these as any other areas for market opening and liberalisation.
Trade officials are arguing that government provided services are not covered by the GATS, but this is somewhat misleading since the GATS disciplines will apply where in any country private domestic services operate in competition with or complementary to public sector services.
* 9. In relation to the TRIPS agreement, developing countries have requested for the transition period (before implementation) to be extended until the present mandated process of reviewing the agreement is completed.
Many developing countries (including the Africa Group) have also put forward concrete proposals for amending TRIPS to prevent the patenting of life forms and to allow developing countries the right to protect the rights of local communities so that their resources and knowledge will not be patented by big companies of the developed countries. But so far there has been negative response from developed countries. Instead hundreds of cases of 'biopiracy' are taking place.
* 10. Many developing countries have asked for more time to comply with the WTO's prohibition against using investment measures such as 'local content policy' (that requires projects or industries to make use of local materials). They have requested that the WTO decide to relax the implementation schedule for developing countries as a whole, on a multilateral basis.
So far, however, the developed countries have instead insisted that each request for extension be treated on a case-by-case basis, and in 'bilateral consultations' seek to extract more concessions, and place onerous conditions on those seeking extension. Complaints have also been lodged against some of the countries, in an effort to pressure them.
* 11. Over the past year or two, the dispute settlement process has been shown to be seriously flawed, affecting the credibility of the whole WTO system. In some cases, the panels and the Appellate Body have strayed beyond their jurisdiction and have used specious arguments about "treaty interpreter's rights" into rule-making (the prerogative of WTO Members through the General Council or Ministerial Conference).
Many of these decisions have created new obligations for developing countries and reduced their rights and thus further constricting the policy options of developing countries to promote development, thus acting against the legitimate interests of these countries. And there is some evidence of the excessive influence and role of the WTO Secretariat in the dispute settlement process, in violation of all legal and judicial norms.
The US and appellate body initiatives to open the dispute process and enable amicus curiae briefs are 'red herring' attempts at distracting attention from needed reforms.
The above indicative list shows that there has been little or no progress since Seattle to make the WTO rules and system more appropriate to the needs and interests of developing countries.
This has further eroded the WTO's credibility with the policy makers and the public in developing countries.
Part III: Some Measures Needed to Improve the Situation
For the situation to improve, the developed countries have to show much more serious commitment to meeting the demands of developing countries. In particular developed countries need to take some urgent steps for the system to improve:
* Those countries that have been pushing for a New Round with new issues should stop doing so. The NGOs are reaffirming their opposition to any such New Round being launched in 2001.
* Moreover, the developed countries should not bring these new issues in regional and bilateral agreements.
* The deadline for developing countries to implement the WTO agreements should be extended until the implementation issues are settled. And they can't be allowed to be jettisoned by the industrialized nations withholding consensus or not negotiating.
* Developed countries must be much more sincere, sympathetic and responsive to the requests made by developing countries to review and amend the rules in several Agreements.
* Developed countries should not pressurise developing countries to further liberalise their agriculture and services sectors.
* The developed countries should instead liberalise those sectors that remain protected which could enable developing countries' products to be sold in their markets. They should also stop disguised protectionist measures such as anti-dumping action.
* The position of the Africa Group that all life forms and living processes be prohibited should be supported by all countries and the TRIPS should be amended to this effect.
* There must be a thorough overhaul of the dispute settlement system. Panels and Appellate Body must not encroach into the area of law making; their independence should not be compromised by the undue influence and role of the Secretariat; and a mechanism should be established that can correct unfair or imbalanced judgments and decisions.
* Meanwhile, over a thousand NGOs worldwide have endorsed a joint statement, "WTO: Shrink or Sink." All the points in that statement should be addressed by the policy makers of all WTO Member countries.
1. A shorter version of this report was published in the South-North Development Monitor (SUNS) on 5 December 2000. Acknowledgements are due to its Chief Editor, Chakravarthi Raghavan. For subscription to SUNS, contact email@example.com.