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FROM SUBSTANTIVE TO PROCEDURAL ON 'CONFIDENCE-BUILDING'

by Chakravarthi Raghavan


Geneva, 2 May 2000 -- The "confidence-building" package of priority action measures to be taken at the World Trade Organization in the aftermath of the Seattle failure seems likely to end up with at best procedural decisions, rather than substantive ones, and with very uncertain effects.

After an informal meeting of the General Council Tuesday evening, it appeared that a number of pending problems in the "confidence-building" package of measures, identified by WTO Director-General Mike Moore in February remain unresolved.

The Council, at the formal meeting Wednesday afternoon, is due to take up the substantive items under the so-called 'confidence-building' measures and under this, is expected to hear from the Quad and a few others about their intentions on enhancing market access for the LDCs.

It is also expected to take some procedural decisions for setting up a mechanism, a Special Session of the General Council, to address the implementation issues raised by developing countries, and on how to deal with the issue of transition periods that have come to an end on 31 December 1999 under multilateral trade agreements, and including specifically that under TRIMS, and/or decisions of the WTO at Ministerial conferences (like the tariff moratorium on E-Commerce transactions).

As of Tuesday evening, there was still no agreement on choice of a chairman for the Committee on Agriculture (who would chair the Special Sessions of the committee in the negotiations on further liberalisation and reforms in the sector) or of the TRIPS Council Chair and chair of the various subordinate bodies.

Nor is there any agreement on all issues relating to internal transparency and inclusive process of participation of members in decision-making, nor on the WTO Director-General's request for increasing the budget for technical cooperation.

In informal consultations among a smaller number of countries, the secretariat evolved compromise texts on the implementation and TRIMs issues, but this met with some objections at the informal Council meeting Tuesday.

Mexico expressed its inability to agree to a consensus on the TRIMS text, while India, supported by Pakistan and Malaysia among others, did not want to see any linkage between the implementation mechanism and a new round of multilateral trade negotiations.

In further informal consultations Wednesday morning, it appeared that some compromise might be evolved on implementation, by a formulation referring only to a "possible" further multilateral trade negotiations, and a statement from the chair that the implementation decision would in no way prejudice the position of countries on the launch or otherwise of such negotiations.

The TRIMS issue though was still unresolved over intra-Mercosur problems as well as over Mexican objections. Trade diplomats said that Argentina opposed any formulation putting possible extensions of transition period for countries who have notified TRIMS (as Argentina had done) with problems of countries that did not notify at all (as Brazil). And Mexico, which had notified TRIMS and is seeking extension of time-period for compliance, not to be made more difficult or conditional under the proposed decision than under TRIMS itself.

The issue of extensions of transition periods under other agreements -- customs valuation, technical barriers to trade, TRIPS (all transition deadlines under various agreements where developing countries are involved) and the subsidies agreement, enabling the industrialized countries to provide regional and other subsidies, and the E-commerce tariff moratorium (that ended with the collapse of the Seattle meeting) -- is also unresolved: with Pakistan, the Dominican Republic and some others favouring a package approach, a general political decision to extend the deadlines, while the United States and others want a case-by-case approach.

The Quad countries (Canada, the EC, Japan and the US) are expected to be joined by Norway, Switzerland, the Czech Republic, Korea and Chile, in advising the General Council Wednesday of autonomous measures they plan to take under their preferential schemes to provide least developed countries (LDCs) "duty- and quota-free access, consistent with domestic requirements and international agreements, under their preferential schemes, for essentially all products originating in LDC members."

Though presented as covering 99% of all imports from LDCs, without actual details at tariff-line, and the fine print of the conditions, it would be difficult to make any assessment.

But at the informal Council meeting last week, two LDCs who spoke (Haiti and Uganda) brought out that the offer is even less than what had been promised as a first step in 1996 at the Singapore Ministerial Conference.

At the informal meeting Tuesday, Bangladesh said it would make a statement on the package at the formal General Council meeting Wednesday.

[An IPS report from Brussels says that at the April 10 informal meeting of the WTO General Council, most developing countries agreed that the Quad Group proposals could not be a basis for negotiations or for confidence-building measures. And Bangladesh - which often speaks for LDCs at the WTO - described the Quad Group initiative as "confidence-shattering" and several other WTO members describing the Quad package as "meaningless" and "underwhelming".]

[The one percent of total imports (of the Quad) that will still be subject to trade barriers include "sensitive" products such as sugar and bananas in the case of the EU, and textiles in the case of the United States and Canada, hence the package may be in for another lukewarm reception.]

[WTO Director-General Mike Moore, in a speech last month before the National Press Club in Washington had said that consensus was beginning to form around "a host of issues that may not have garnered many headlines but which are of great importance." These issues, he said, include "better market access for the Least Developed Countries in the developed world, greater funding for technical assistance and training, (and) closer co-operation among development agencies in bringing the LDCs in from the sidelines" of world trade. Moore noted that with official development assistance contracting, it was vital that the LDCs turn to trade as a means of accumulating hard currency earnings, "but sadly, this is not happening."]

["I know that leaders in many of the world's mighty and modest nations are working to remedy this situation ... I hope very much that in the coming weeks, I will be able to announce a package of market access openings, increased technical assistance and better co-ordination and coherence between the WTO and the key development institutions like the World Bank and United Nations Development Programme (UNDP) on building capacity in the Least Developed Countries," said Moore.]

[In other forums that week, he expressed his strong disappointment with the Quad Group's initial plan and failure to commit funding for WTO technical assistance and training programmes for LDCs, and said he would not lobby LDCs to accept the package.]

On internal transparency and effective participation of members in decision-making, the issue is to be pursued further (in the light of consultations held so far by General Council Chairman, Amb. Kare Bryn of Norway, and the secretariat). Bryn plans to make an oral statement at the meeting Wednesday on the progress so far.

An irony that either escapes the WTO membership and leadership or one that no one wants to talk about in public is that all talk of more transparent, inclusive and effective decision-making process of decision making is taking place in informal, 'green room' type consultations among a few - whether invited by the secretariat or the chairs of WTO bodies. But in a written note on the transparency issue in February, Egypt had noted that the first post-Seattle meeting, whose failure was blamed on the problems of the old GATT processes of decision-making not keeping up with the large WTO membership, was through the same 'green room' meeting.

Though the small meetings and consultations are now presented as 'drafting' or informal consultations, and not substituting for decision-making, and the outcomes out of small meetings are presented as elements of texts commanding large majority support but not consensus, the fact that informal texts come out and are circulated to members, daring those having problems to stand out and withhold consensus, shows that nothing much has really changed.

Informal consultations were continuing at the General Council Wednesday morning to find compromise formulations on addressing implementation questions raised by developing countries, the extension of transition periods under the multilateral trade agreements, and in particular that under the Agreement on Trade-Related Investment Measures.

At an informal General Council session Tuesday evening, Mexico said that as formulated the proposed text on TRIMS was not acceptable to it. On the mechanism for implementation issues, India, supported by Pakistan and Malaysia did not want references that would link this to a new round of multilateral trade negotiations.

At the end of the nearly 4-hour informal discussions, trade diplomats said consultations would be continued Wednesday morning, and that they expected some compromise to emerge.

At the meeting Tuesday, the United States administration which has just notified Congress under the Super 301 and Special 301 provisions of its trade law about the disputes that the Trade Representative is pursuing or planning to pursue against several key developing countries (over TRIMS, TRIPS and other agreements), sought to explain away these steps as 'statutory requirements' on the administration, and thus not an infringement of the "due restraint" agreed to by all members at the General Council in December.

Brazil (one of the countries named) raised the issue at the informal Council meeting, and the US responded to it.

Other countries named in the US notification to Congress included Argentina over TRIPS, India's investment requirements in the automotive industry, the Philippines local content over motor-cycles, automobiles and commercial vehicles, and Brazil over customs valuation.

On the implementation-related issues, the text evolved in informal consultations and circulated to members, provides among the elements (presented as commanding large majority support, but not consensus):

* the General Council meeting in special sessions, address 'outstanding implementation issues and concerns', particularly those raised during preparations for the 3rd Ministerial Conference (and reflected in paras 21 and 22 of the informal Chairman's text for a Ministerial Declaration dated 19 October);

* the first such special session is to be held in June 2000, and the process is to be completed no later than the 4th session of the Ministerial Conference;

* in addressing these issues, the General Council is to assess the existing difficulties, identify ways needed to resolve them and take decisions for appropriate action;

* in carrying out this work, the General Council may direct other WTO bodies to provide any appropriate inputs and take any required action. It may also take into account any implementation-related issues under consideration in other WTO bodies.

An element in this package, on which India and a few others have expressed some objection, provides that the implementation process "shall be without prejudice to any future decisions that may be taken by the General Council to further advance its work in this area, including in the context of further multilateral trade negotiations."

Trade diplomats said that in consultations last week and before, this particular wording, to link the implementation process to the new round of multilateral trade negotiations being pushed by the EC, Canada and Japan, was formulated in the secretariat draft and presented to a small number of delegations, leaving those having problems like India to object in the General Council. (SUNS4660)

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

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