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Elusive chase for Doha’s S&D promises?

Given the tenor of ongoing talks on special and differential treatment, developing countries may end up being unable to effectively avail themselves of more favourable WTO provisions to offset their relatively disadvantaged position in the multilateral trading system.

by Chakravarthi Raghavan

GENEVA: Special and differential (S&D) treatment, both for righting the wrongs of the past (through the “implementation-related” decisions) and in the new round of WTO trade negotiations, seems likely to be even more elusive and illusory than in the previous round, the Uruguay Round, unless the developing countries join together and make clear that without concrete decisions on this question by the new December 2002 deadline, there can be no progress on anything else.

This last, however, may prove to be resting on hope rather than past experience.

That S&D treatment may prove at least as illusory as in the past has been brought out by the way the work at the Special Sessions of the WTO Committee on Trade and Development (CTD), mandated by the Doha Ministerial Conference to address this issue, has been subject to dilatory tactics on the part of the industrialized countries. In addition, recent comments by the new WTO head Supachai Panitchpakdi at the UN Conference on Trade and Development’s (UNCTAD) Trade and Development Board give some cause for concern.

At the informal interactive high-level segment of the Board on 7 October, Supachai broached the idea of “graduation” of developing countries out of S&D treatment. He said that to reach agreement by the new December deadline, a “prudent and cautious” approach was needed so that S&D treatment did not become “an escape clause” from economic reforms. He added that two issues need to be addressed and resolved: whether the same provisions on S&D treatment could apply to all the WTO agreements or vary over them; and how the issue of graduation can be addressed.

The problem of graduation, unfortunately for Supachai, is not of the concept, but lack of objective criteria that will be multilaterally implemented. Per capita incomes are no criteria at all, as UNCTAD’s Trade and Development Report 2002 (Chapter III) has brought out.

Under the Doha mandate, the CTD was to have reported to the WTO General Council by July with clear recommendations on making the provisions on S&D treatment in the WTO agreements more precise, effective and operational. The July deadline could not be met and was extended till 31 December this year.

Though the S&D issue is said to be a priority one, with one deadline already missed, the CTD Special Session is unable even to schedule meetings, unless its members agree to ‘informal’ sessions during lunch hour or late in the evenings, when interpreters may not be present and there will be no record of anything.

The 7 October meeting of the CTD Special Session (see following article) adjourned at about 6.00 in the evening, with a new meeting to continue the discussions to be set by the CTD Chairman (depending on availability of meeting space and interpreters), trade diplomats said.

History of (not so) special and differential treatment

The issue of S&D treatment to developing countries came up at the end of the Tokyo Round of multilateral trade negotiations, in the Enabling Clause of 1979, which was used by the US and the EC to force developing countries to move away from the Raul Prebisch concepts for preferential treatment to developing countries in international trade (at that time confined only to exchange of goods across borders).

The industrial countries, which did not like the Prebisch concepts and his scheme of generalized, non-reciprocal  and non-discriminatory trade preferences but had been forced to agree at UNCTAD, used the Enabling Clause (negotiated in secret “green room” conclaves) to move the developing world towards “integration” into the world economy.

And developing countries since then continued to use it as a slogan to somehow convince their own home constituencies that they were getting something beneficial in return.

The concept was carried forward and made a part of the Punta del Este Declaration in the Uruguay Round - with the major industrialized countries at that time agreeing to it, but with no intention of doing anything more than the “best-endeavour” efforts of the old GATT and its Part IV.

In the negotiations, the US and EC would argue that they could not provide the same S&D treatment to all the countries, often using the dialectic of contrasting South Korea and Singapore on the one hand with Bangladesh and other least developed countries (LDCs) on the other.

This divided the developing world - with Bangladesh leading the LDCs, tabling proposals for more beneficial and preferential treatment to the LDCs; and on the other side, South Korea, Singapore and others, very advanced among the developing countries, using the “solidarity” argument to maintain S&D treatment for themselves too.

Though these very same countries did not support the other major developing countries in other rule-making areas and often took mercantilist positions closer to those of the industrial world, the other developing countries and regional groups supported the principle of S&D and opposed graduation.

The real issue, if there was to be graduation, of multilaterally agreed or agreeable rules and principles and criteria was not addressed, even though once or twice it was raised in UNCTAD by its then Secretary-General Gamani Corea and later by the late Kenneth Dadzie.

But this disappeared from the UNCTAD lexicon, as the secretariat divisions pursued the agenda of their limited constituencies in the post-Brussels phase of the Uruguay Round negotiations, and some leading developing countries began to take the view that with integration they would get complete non-discriminatory trade rights and benefits. But this hope soon dissipated.

However, in the euphoria of neoliberal economics and its development model of unilateral trade liberalization producing more trade, growth and welfare benefits (a view promoted by the Bretton Woods institutions and the GATT secretariat advocating the ‘free-trade ideology’, but without empirical evidence of benefits), many developing-country governments and leaders began speaking the same language and using the same jargon. (Through the entire negotiations though, the US, the EC, Japan and Canada did not accept ‘free trade’ as a guiding principle for their own conduct.)

The somewhat illusory references to S&D treatment in the various WTO agreements came to be included in that context - though until the final months of 1993, none of the developing-country governments back home, leave aside their parliaments, where they existed,  had the slightest clue that all the agreements would be put into one package with everyone being asked to accept everything as a “single undertaking”; a concept that was not even in the original Punta del Este mandate or the one given to the GATT Director-General Arthur Dunkel at Brussels in 1990. The trade ministries of developing countries did not even keep other ministries or their public  informed.

The LDCs themselves felt very happy that there were special references to them in the texts, until the time came in December 1993, and in the weeks before the formal conclusion of the Uruguay Round in Marrakesh in April 1994, when all of them found that they would get no tariff or trade concessions on products of export interest to them, unless they made some concessions to the advanced countries, with whom they had to negotiate bilaterally.

And the developing countries, who thought they would not face discriminatory treatment in the future (such as in textiles and clothing trade or other labour-intensive products), found at the end that those regimes would continue under the WTO for another 10 years, with every prospect that beyond that time other industry- or sector-specific defensive instruments (like anti-dumping actions) would be used to keep out their competitive products.

Some of the more advanced developing countries, like those in the Association of South-East Asian Nations (ASEAN), etc, also thought that new obligations like TRIPS, etc would only hit the Indias and Brazils; but now they are hit themselves.

It was only three or four years into the WTO that all the developing countries began to discover that they had struck a Faustian bargain, but the devil was not even fulfilling what was promised in this life and on earth in return for the surrender of the soul in the other world.

Impasse

The implementation issues and the demands for operationalizing S&D treatment surfaced in that context, first in the run-up to the Seattle Ministerial Conference in 1999 and then in the lead-in to Doha.

In the wake of the 11 September attacks, the US and the EC quickly joined hands and used the WTO process to launch a new round of trade negotiations at Doha, using the Qatari style of democratic decision-making at the meeting. They promised to tackle the S&D issues as a part of the implementation-related issues and concerns on a fast track, as also to make S&D an integral part of the negotiations.

However, once again in the talks at the WTO, the major industrialized countries are raising the issue of the heterogeneity of developing countries and the need to differentiate between the Singapores and the various small economies and the least developed.

The CTD Special Sessions have also got into tautological arguments about the meaning of S&D treatment and other questions which go far beyond the mandate provided at Doha.

In WTO style, the majors can be expected to create an impasse and get the mandate changed at the 5th Ministerial Conference next year, which Supachai described at the UNCTAD meet as a “mid-term review” - forcefully reminding many old trade diplomats and observers of the way the Punta del Este mandate was changed at the April 1989 mid-term review meeting with the help of the then Director-General of GATT.

In some amount of innocence perhaps of the ways of the actual negotiations at the WTO, Supachai, an eminent economist and former minister of Thailand (whose main focus in the Uruguay Round was, as a Cairns Group member, to get access in other markets for its rice exports), is now trying to talk to the developing countries (and other international secretariats) to look at the issues of graduation and how to deal with it.

Apart from raising it as he did at the UNCTAD meeting (where the purpose of an interactive session at the unique and open forum of UNCTAD was lost in the time taken for a video-conference with some ambassadors in New York, and prepared statements from the EC and a few others), there was little time left to probe Supachai on the issues he raised and suggestions he made. For example, before taking office he had been talking of forming a steel cartel of sorts to restructure the global steel industry to avoid the conflicts aroused by the US steel safeguards.

At UNCTAD on 7 October, he also made references to the move by Thailand for rice-exporting countries to cooperate to maintain or get improved prices, and suggested this as a way out of the problems of commodity exporters and the continuously deteriorating terms of trade.

But if trade in steel and rice can be so organized, why not in other sectors and how? And what does it do to the multilateral trading system and its rules?

No doubt these and other issues will be or are being discussed in the secret conclaves at the WTO. For, despite various protestations, it still remains secret, with informal meetings, and informal informals, among a few members, and with formal plenaries purely to create some records for future use by the WTO’s dispute settlement panels! And even formal decisions of the Trade Negotiations Committee (TNC) overseeing the new negotiating round can be ignored at will.

For example, in February, the TNC did not agree to the suggestion of the General Council Chair (Stuart Harbinson) that they only take note of his statement on organizing the TNC and the negotiations, and the TNC members insisted that the negotiating structures be a decision of the TNC. They then decided  that all negotiating bodies shall be chaired by trade representatives of member countries in Geneva. Nevertheless, Harbinson, though now a chef de cabinet of Supachai, continues to run the agriculture negotiations, because it suits the interests of the US and EC, who can thus control the dynamics of those talks.

However, the S&D concepts and the question of graduation are serious economic and development issues that cannot be properly addressed at the WTO talks, given the way they are structured and held, and should not even be brought on the agenda without adequate discussions in open fora elsewhere.

And UNCTAD, which decided at its 9th session in 1996 to undertake a consensus-building role, has been turned, for reasons for which developing countries themselves have to be held responsible, into a forum where some of the commissions, committees and expert groups are being sought to be used to persuade developing countries to accept as consensus the agendas being promoted by the majors. (SUNS5209)                     

From Third World Economics No. 292 (1-15 November 2002)

 

 

 


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