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WTO HAS DIFFERENT APPROACHES TO TPRM REPORTS

In reponding to sharp questions from the media on the trade policy review of the EU at the WTO, a senior official of the secretariat conceded that two different approaches were applied when drawing up and presenting the secretariat's reports on the trade regimes of the membership - one for the US and EU, and another for the other members.

by Chakravarthi Raghavan


Geneva, 14 July 2000 -- A senior official of the secretariat of the World Trade Organization, Mr. Clemens Boonekamp, who heads the division on the Trade Policy Review Mechanism, conceded Friday that two different approaches are adopted in the drawing up and presentation of secretariat reports on trade policies and practices of the Membership—one in relation to those of the United States and the European Union, and another for the other members.

Boonekamp was responding to some sharp questions from the media, at a WTO briefing by the chairman of the Trade Policy Review Body, Amb.  Iftekhar Ahmed Choudhury of Bangladesh, on the trade policy review of the European Union on 12-14 July.

Choudhury had been asked to explain the two different views of the EU trade policy regime that has emerged—one presented by the secretariat and the other by all members, barring those who were seeking to join the EU, who took the floor to criticise several aspects of the EU’s regime. Choudhury was also asked to explain the contrast in the way the secretariat reported on the US and EU on the one hand, and the other members, particularly developing countries on the other hand.  There was no reference in the EU report to the problems over beef hormone or the banana regime disputes, one questioner noted.

Choudhury turned the question over to the secretariat, when Boonekamp replied that the focus of the Trade Policy Review (TPR) report was not about dispute settlement or any particular obligation, but the broad sweep of the trade policy.

But another questioner came back with the question in what he called ‘blunt language’ and said the secretariat “does a kind of white-washing of the US and EU, but does not do the same justice to developing countries, where you raise all kinds of concerns and hit them so sharply that it looks as if it is no longer a trade policy review but one subjecting a sovereign government to criticisms which you don’t do here.”

Boonekamp said the report on the US had drawn attention to its role in the multilateral system, particularly its open economy that had served the recovery from the Asian crisis. “The openness of the US economy is important to the multilateral system and the functioning of the global economy. This is similarly true of the EU. By and large the EU has an open trade regime. There are warts in that regime and the report points to each and everyone of them... is very critical on the major warts - the CAP, the textiles regime, rise in anti-dumping measures....”

However, Mr. Boonekamp conceded, “there is a difference in the way of presentations in these reports... country members of the EU, or the US, are critical to the functioning of the multilateral trading system (MTS). The reports look in detail how these countries serve the MTS.  That too was the emphasis in the discussion (at the TPRB) over the last two days..a very systemic discussion... (in the economies of) the smaller members that are examined and come under review, the emphasis is how the trade mechanism, the trade policy regime, can assist those countries in achieving sustainable development. That is the emphasis in those reports. That is why increasingly the TPR mechanism is linked with the technical assistance aspect of the WTO.”

However, the objectives and purposes of the TPRM, and its periodic review of the trade policy regimes of member countries, and the role of the secretariat in this behalf, are clearly set out in the WTO rules.

And in a rules-based system, any authority for the WTO and its bodies or the secretariat has to be found in the rules, and the criteria suggested by Boonekamp cannot be found in the rules—neither in terms of special and differential treatment for developing countries or the reverse way it actually operates in the WTO to favour the US and the EU.

The objective, purpose, procedures, and reporting are laid out in paras A to G of Annex 3 to the WTO agreement (pp 434-437 of the Legal Texts of the Uruguay Round agreements published by the secretariat). The rules are the same for all members, excepting for the periodicity of review.

The purpose and objectives of the trade policy review are spelt out in Paragraph A.(i) to the Marrakesh Agreement—“to contribute to improved adherence by all members to rules, disciplines and commitments,” under the multilateral agreements and, where applicable, to plurilateral agreements. The review mechanism is to enable “regular collective appreciation and evaluation of the full range of individual Members’ trade policies and practices and their impact on the multilateral trading system.”

Paragraph C.(iii) makes clear that the discussions in the meetings ‘shall be governed’ by the objectives in para A. And to assist this process, para C.(v).(b) calls for a report to be drawn up by the WTO secretariat, on its own responsibility, based on information available to it and that provided by members and the mandate to the secretariat that it ‘should’ seek clarifications on the information provided by members.

While the periodicity of review of members (para C.ii), as between the first four trading entities and others (with first four’s policies to be reviewed every two years, the next 16 every four years etc.), the focus of the discussions, the yardstick to be applied for the review of the trade policy of everyone (para C.iii) is the same: “impact on the multilateral trading system” and to achieve “greater transparency in, and understanding of, the trade policies and practices of Members.”

Para C.(v). requires the TPRB to base its work on a full report by the member, and a secretariat report, drawn up on its own responsibility, based on information available to the secretariat and provided by members, and seeking clarifications from members.

And Rule 10 of the rules of procedure of the TPRB, in the third sentence says: “Secretariat reports should focus principally on the trade policies and practices of the Member under review, seen, to the extent necessary, in the context of overall macro-economic and structural policies.”

Thus, while the secretariat has been given the right to draw up a report on its own responsibility, the purpose of the report and the yardsticks to be applied are the same for every member. The same yardstick is to be applied and, if anything, given the weight of the US and the EU in world trade and economy, and the effect of their policies and failings on everyone, the yardstick is to be applied more rigorously, and the ‘warts’ brought out more prominently and sharply.

Neither the TPRB provisions themselves, nor the rules, have been modified, changed or interpreted.

[Trade observers have noted that when the TPR exercise was begun after the 1988-89 Uruguay Round mid-term review, the GATT secretariat in an effort to sell this idea and get a handle to probe countries’ policies, brought out in a critical way the reports on the EU and the US. But once the TPR exercise became a regular part of the WTO, it has become - at least in the preparation and presentation of the reports - another instrument to further the interests of major corporations in the developing world, by gathering details of the trade policy and publishing them. But developing countries themselves are to blame for this state of affairs - few go to such meetings and raise systemic issues beyond their narrow trade concerns with the particular country.]

The Boonekamp explanations about the different approaches of the secretariat to the US, EU and developing economies, and the ‘linking of technical assistance’ to the trade policy reviews, in practice has in fact added to the disquiet and suspicions about the WTO in the developing world.

In 1998, during the Asian crisis, the WTO technical assistance mission went to Jakarta, and using the information available to it, and provided by the IMF/World Bank in their conditionality and country reports, tried to pressure the trade officials to notify to the WTO (and then bind it in schedules) the market opening concessions (in goods and services) forced on that country by the IMF and World Bank.  Fortunately, for the Indonesian public, the trade officials decided to ignore the WTO advice. If they had not, the WTO would have been able to prevent that country changing its policies, if it was not working.

In the case of the review of the EU’s trade policy regime this time, the difficulties and problems were compounded for the membership when the TPRB chairman decided to do away with the practice of choosing two discussants (from among the members) who, in their personal capacities, lead the discussion. And this is provided for in the TPRM rules.

At the press briefing, Mr. Choudhury explained the absence of discussants in these terms: “Gradually, we are trying to introduc[e] some reforms into the TPRM to make the process more efficient. In some cases we have reduced the number of discussants from two to one. In the case of the EU - and this was justified by what happened - the interest was so large that every facet of policy dimension would be covered in one way or another, and there was no need to lead the process by a discussant.” The issue was however in the hands of members and if they wanted to alter this, it will be done. The idea of having no discussant had been broached by him during the review last month of Peru. There were differing views on it at this meeting... and he had received a letter from the Indian ambassador and he had responded to it, and he was willing to bow to superior wisdom....”

Mr. Boonekamp intervened to say that the rules provide only that a Chairman “may” choose discussants, who “shall” lead the discussions.  There was no requirement to have a discussant. And dispensing with a discussant in the EU’s case had been done in full consultation with the EU.

Para C.(iv), to which Boonekamp referred, says in its third sentence, “In consultation with the Member or Members under review, the Chairman may choose discussants who, acting in their personal capacity, shall introduce the discussions in the TPRB.”

The permissible ‘may’ is only to give flexibility to the Chairman in the choice of discussant or discussants, not to do away with them. That the discussant is not a luxury to be dispensed with, but is there to help focus the discussions, is clear from rule 12 of the rules of business of the TPRB, which says: “Discussants chosen pursuant to Paragraph C (iv) of the Agreement on TPRM shall circulate to Members outlines of the main points they intend to raise in a review meeting, at least one week before that meeting. Their full statements, which should be designed to provide specific themes for discussion, should be given to the Member under review shortly before the meeting.”

The purpose of the discussants is to enable a focused discussion, and so far the discussants have not only helped a focused discussion, but both by circulating their points in advance to the membership and, in intervening in the discussion to tell the country reviewed on the points it was not addressing or evading in its responses, have contributed to achieve a broader purpose. And to ensure a balance, two discussants generally have been chosen, one from the North and another from the South.

In the run-up to Seattle, and the review exercise that the TPRB was required to carry out and report to the Ministers, there was an attempt to cut the number of discussants to one - with the US advancing the argument that many small countries had mainly rural economy and little impact on the world trade system, and some time could be saved by having just one discussant. There was no consensus on this, and only a recommendation could be made about ‘flexibility’ in choosing discussants. And the TPRB outlined the differing viewpoints, and the view about flexibility. The Seattle meeting is reported to have taken note of the report, but this is not enough to modify rules of the WTO or the procedural rules.

But this is what has happened in the case of the EU.

As Mr. Choudhury noted in the press briefing, the issue appears to have been raised by India in a letter to him, and the response apparently was that the chair had consulted the Member (EU) and decided to dispense with a discussant, and that he had made a reference to it in his opening remarks at an earlier meeting of the TPRB (over Peru’s trade policies). According to trade officials, there were consultations between the Chair and the EU on the number of discussants, with the EU not willing to have a single discussant; and this had ended up with the EU saying there was no need for a discussant and the Chair acquiescing to it.

In its intervention in the TPRB exercise of the EU, India raised this issue (the text of the Indian speech, as that of others who had provided a text was made available to the media by the WTO media office) and expressed its concern over the non-nomination of discussants. India noted that while the chair had responded to its communication on this, the issue was serious enough to warrant a reference in the meeting. Annex 3 of the WTO, India noted, made it very clear that the discussants “shall” introduce the discussion. “This legal requirement cannot be dispensed with lightly,” Indian ambassador S.Narayanan said in his speech. The report to the 3rd ministerial conference “alluded to flexibility on the role and number of discussants”. India had participated in the discussions leading to that report which was not meant to do away with discussants completely. At best the idea was in the case of reviews of members whose trade policy regime was relatively simple and straight forward, there should be a possibility of having one rather than two discussants. Since there was no clear consensus, the report was couched in non-specific terms and did not amount to any decision regarding the role or number of discussants. The presentations by discussants generally helped smaller delegations to participate effectively in discussions. The absence would hurt them.

Referring to the chair’s response that he had referred to this issue in introductory remarks during the review of Peru in May, Narayanan deplored the practice in the TPRB of raising important issues without adequate notice or including them in the agenda, creating difficulties for delegations like India’s. While noting the chairman’s assurance that his judgement on the number of discussants remained open, India deeply regretted the absence of discussants for the EU review.

[The rules of the TPRB (rule 4) require the agenda for each review meeting to be circulated four weeks in advance, and matters to be raised under ‘other business’ shall be communicated to the chairperson or the secretariat before the relevant meeting. And while issues are allowed to be flagged under ‘other business’ in WTO bodies this way, no decision or even substantive discussion can take place, without specifically bringing an item on the agenda and providing due notice to all members.]-SUNS4710

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

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