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TWN Info Service on WTO Issues (Sept03/1)

Third World Network

5 Sept 2003

 

Dear friends and colleagues

40 DEVELOPING COUNTRIES SUBMIT FORMAL WTO MINISTERIAL CONFERENCE PAPER ON SINGAPORE ISSUES

Attached below is a formal document of the WTO Ministerial Conference which has been submitted by the LDC countries and 15 other countries putting forward their proposed Texts on the Singapore Issues.  Since there are more than 30 LDC countries in the WTO, this document is now officially submitted by some 40 WTO members.

A majority of developing countries have made clear that they would like a decision in Cancun that the discussions on the Singapore Issues continue in the working groups, instead of starting negotiations on them.

In the General Council chairman’s draft Ministerial Text, there are two options on each Singapore Issue:  option 1 to start negotiations immediately after Cancun, and option 2 to continue the clarification of the issues in the WTO.

Attached to option 1 for each Singapore Issue is an annex giving an outline of how the negotiations will be conducted.  These four annexes (one for each issue) are very controversial, because they represent almost exclusively the EU-Japan position on modalities, and if they are accepted they would mandate extreme forms of the negotiations and eventually the new agreements.

The developing countries that advocate Option 2 have strongly criticised the General Council chairman’s Cancun draft for including these Annexes, whilst not giving the same prominence and space in the text to their Option of conitnuing the clarification process.

These countries put forward a paper with their own four Annexes on the issues that need to be further clarified on each of the Singapore Issues.   This paper comes with a cover letter from the Ambassador of the India Mission to the WTO.

The paper had been circulated at the end of August during the last General Council meeting.  The sponsors had requested the GC chair to include the Annexes as part of the draft Ministerial Text that will be transmitted to Cancun.  However it is now clear that he has decided not to include these texts.  He has also, in his cover letter accompanying the draft, referred only briefly to these alternative texts.

The sponsoring countries have asked that the document be made an official WTO document, for circulation as a  paper of the Ministerial Conference.  Several more countries have now joined as signatories to the proposed texts, as compared to the same document that was first circulated at the General Council.

The document dated 4 September is attached below.  It will be an important document that will be at the heart of the discussions on Singapore Issues at Cancun.  Please circulate it to your other colleagues who are interested in the issues.

With best wishes

Martin Khor (TWN) 

 

WORLD TRADE ORGANIZATION

WT/MIN(03)/W/41[1]

4 September 2003

 

(03-4588)

 

MINISTERIAL CONFERENCE

Fifth Session

Cancún, 10 - 14 September 2003

Original:            English

 

Paragraphs 13, 14, 15 & 16, dealing with Singapore Issues, of the draft Cancún Ministerial text contained in document Job(03)/150/Rev.1

Communication from Bangladesh (on behalf of the LDC Group), Botswana, China, Cuba, Egypt, India, Indonesia, Kenya, Malaysia, Nigeria, Philippines, Tanzania, Uganda, Venezuela, Zambia and Zimbabwe

The following communication, dated 2 September 2003, has been received from the Permanent Mission of India on behalf of the above delegations. 

On behalf of the delegations of Bangladesh (on behalf of the LDC Group), Botswana, China, Cuba, Egypt, India, Indonesia, Kenya, Malaysia, Nigeria, Philippines, Tanzania, Uganda, Venezuela, Zambia and Zimbabwe, I write to request you to circulate the joint communication contained in document WT/GC/W/514, dated 28 August 2003, as a formal Ministerial Conference document.

Paragraphs 13, 14, 15 & 16, dealing with Singapore Issues, of the Draft Cancún Ministerial Text contained in document JOB(03)/150/Rev.1

In paragraphs 13, 14, 15 and 16 of the draft Ministerial Text dealing with Singapore Issues, two options have been indicated, one expressing the proponents’ view and the other of those who favour continuation of the clarificatory process.  The sharp difference of view among Members on these issues does not offer any other choice. 

However, the Annexes D, E, F and G to the Draft Ministerial text, that reflect the view of proponents on the modalities, gives a distorted view, that the Annexes have been discussed by Members.  It would be recalled that the text on transparency in government procurement was introduced by the proponents in a small group meeting.  We are not aware of any text having been put forward by the proponents on trade facilitation.  The text on competition policy was discussed only in a small group meeting.  Only the proponents’ paper on investment was introduced and discussed inconclusively in the HOD level meeting.  Thus, Members did not have an opportunity to discuss the modalities identified by the proponents in all the Annexes to the Draft Ministerial text. 

There was lack of clarity on how these issues will be dealt with in the draft Ministerial text, due to which Members, who favour continuation of the clarificatory process, could not put forward their views on the issues for further clarification in the form of a paper, though they had expressed their views in detail during the consultations.  My delegation along with those of Bangladesh (on behalf of the LDC Group), Botswana, China, Cuba, Egypt, Indonesia, Kenya, Malaysia, Nigeria,  Philippines, Tanzania, Uganda, Venezuela, Zambia and Zimbabwe have jointly identified issues that require further clarification in the respective Working Groups/CTG. These are reflected in the Annexes to the letter.

In the interest of balance in reflecting the broad spectrum of views on these issues in the Draft Ministerial text, we would like to request you to add these Annexes to the draft text to be transmitted to the Ministers. In addition, we would request that this letter together with Annexes be circulated to all the Members as a formal document of the General Council, so that every Member is aware of the views of our delegations on this important issue.

The issues identified in the Annexes are illustrative and not exhaustive;  the cosponsors reserve their right to bring up additional issues during the process of clarification. Further, it needs to be recalled that negotiations on these issues can commence only on the basis of explicit consensus on the modalities for such negotiations.

Relationship between Trade and Investment Issues for further clarification in the Working Group

1.   The objective of the discussions shall be to enable an improved understanding of the elements of any possible multilateral framework on investment and the impact of such a framework on national economies of members, particularly developing members.

2.   On the basis of Paragraph 22 of the Doha Ministerial Declaration and the work done thus far under the Working Group on the Relationship between Trade and Investment, the discussions in the clarificatory process shall focus on the following aspects:

·        There is wide divergence amongst Members on the issue of scope and definition; whether it should be restricted to Foreign Direct Investment in goods based on an enterprise based definition with a particular focus on green-field and export platform oriented FDI that will lead to expansion of trade or should it cover foreign portfolio investments, debt transactions, investment of short-term & speculative nature, strategic alliances and minority shareholdings, Mergers & Acquisitions.  There is therefore need for clarity on the kind of FDI that should be covered in a possible multilateral framework.  There is also need for clarification on whether measures at sub-national level should also be covered and if so, the mechanism for retaining flexibility for developing members, including sectoral carve-outs for developmental purposes.

·        There is wide divergence on the extent of coverage of any transparency obligations - whether these be limited to publication and notification of relevant policies, laws and regulations or should it extend to administration of domestic laws and procedures, prior notification and comment on investment  provisions.  There is no convergence on whether and how transparency obligations would apply to (i) home Members to cover inter alia publication, notification of policies, laws and regulations with regard to outward investment flows, overseas operation of corporations originating in their territories, sectoral restrictions, restrictions on destination and transfer of technology;  and (ii) to foreign investors to cover information on inter alia raising of resources, sale and purchase of products and services, transfer pricing as well as business relations and allocation of resources and profits.. It is not clear whether and how derogation would be permitted for developing members from transparency obligations for developmental reasons or on account of resource constraints. There is therefore need for further clarification on the scope and coverage of transparency obligation to host member, home member and foreign investor.

·        There is wide divergence on the issue of application of Non-discrimination (MFN and NT) principles - whether non-discrimination provisions at the pre-establishment stage of investment would be part of any multilateral framework at all.  How would members retain the right to policy flexibility to screen and channel investments in line with national policy objectives?  How would specific exceptions be provided in the post-establishment phase for developing and least developed members for development policy reasons?  There is need for further clarification on the issue of application of non-discrimination principles to movement of capital/investments -  which is quite distinct from trade in goods or services.

·        There is need for clarity on exceptions and balance-of-payments safeguards including the right of Members to regulate and to apply restrictions on the movement or transfer of funds by foreign investors into or out of the host Member to prevent and to address any BOP problem or any other financial or currency problem.  There is also no clarity on whether and how broader safeguards for other special situations such as the equivalent of an import surge would apply.

·        There is need for certainty on how special and differential treatment and sufficient flexibilities would be built into the architecture of any framework, including through exceptions (systemic, general, security, Member-specific, permanent carve outs, developmental clause) for developing and least developed members.  The entire issue of integrating the developmental dimension into any possible multilateral framework would require further clarification.

·        There is wide divergence amongst Members on the treatment of performance requirements in any framework and whether and how developing and least developed members would be allowed to have the freedom to apply performance requirements including on local content, technology transfer, R&D, export performance, training, manufacturing and employment generation. This would require further clarification. 

·        There is wide divergence amongst Members on the need for binding Investors’ Obligations and Home Government Measures for enforcement of these obligations on inter alia prohibiting restrictive business practices, promoting technology transfer, ownership and control, consumer and environmental protection, disclosure and accounting and whether Home Government measures should include specific provisions in home Member laws for enforcement of investor obligations?  It is not clear how it would be ensured that foreign investors recognise national policy objectives of host Member, including policies relating to ownership, control, participation, and operation of foreign investors, and adhere to its socio-cultural objectives and values.  How to ensure that any framework reflects in a balanced manner the interests of home and host members and takes due account of the developmental polices and objectives of host member government?  The entire issue of Investors’ Obligations and Home Government measures would require careful examination. 

·        Clarification of regulation of Investment Incentives including at sub-national levels with flexibility for developing Members to pursue their development policies and priorities.

·        There is no clarity on protection standards on expropriation and compensation; would it exclude indirect, regulatory or creeping expropriation, as well as any loss of earnings or income from investment from any coverage of expropriation?  Should Members’ right to regulate in public interest be recognised explicitly? 

·        There is no clarity on the relationship between any multilateral framework and relevant WTO provisions;

·        Further clarification of the relationship between any multilateral framework and existing bilateral and regional arrangements on investment;

·        Would a multilateral framework on investment be under the purview of the DSU?

·        Other issues that participants may wish to put forward for further clarification

 

Trade and Competition Policy Issues for further clarification in the Working Group

·        Non-discrimination: 

(i)   Implication of the principle of national treatment on the policy space enjoyed by developing and least developed Members for pursuing industrial, social and other development strategies.

(ii)  Scope of application of the principle of non-discrimination.

(iii) Further clarification of the relationship between any multilateral framework and existing bilateral and regional arrangements on trade and competition policy.

·        Transparency:  Clarity on the requirement to notify or publish decisions taken in individual cases; would the transparency requirements cover disclosure of enforcement priorities, case selection criteria, exemption criteria and principle of derogation?

·        Hardcore Cartels:  Clarification on the definition of hardcore cartels, including the role of export cartels; would the criteria for prohibition of such cartels be based on ‘per se’ or ‘rule of reason’ approach?  What would be the scope of exemption from general prohibition on hardcore cartels?  It is understood that inter-governmental arrangements are to be excluded from the definition.

·        International Co-operation:  Further clarification on the likely burden on developing and least developed Members for providing information sought by developed Members and the means to compensate them for their efforts.  Would voluntary cooperation limit the ability of developing and least developed Members to receive co-operation from developed Members in investigation of anti-competitive practices?  What would be the norms for exchange of non-confidential information, etc?

·        Compliance Mechanism:  Clarification on the scope of applicability of DSU and/or peer review in this area. 

Transparency in Government Procurement Issues for further clarification in the Working Group

Any possible new rules should cover transparency aspects only and shall not cover market access and shall not restrict the scope of Members to give preferences to domestic supplies and suppliers as agreed to at Doha.

·        Definition, Scope and Coverage:   What should be the definition of Government Procurement; should it cover only goods or both goods and services; should it be restricted only to procurement at the Federal/Central level; whether only procurement above certain value thresholds should be covered; would there be any criteria to define thresholds or should it be left to individual Members to determine; whether purchases by public sector utilities should be excluded; and  what should be the nature of Special and Differential treatment in respect of these elements?

·        Procurement methods and related procedures:  Should there be any prescription for use of particular procurement methods and related procedures or should the procuring entities have full flexibility to choose the procurement methods and related procedures in accordance with their national law and practice?  How would it contribute to development objectives?

·        Domestic review procedures:  Should the framework cover only provision of information on the prevailing domestic review mechanisms or cover broad parameters or principles to be observed by Members? Should there be common criteria for all Members to follow or should it be left to individual Member to determine its own mechanism?

·        WTO dispute settlement system:  Would the WTO dispute settlement mechanism apply to possible new rules on transparency.  If so, how would the cross- retaliation mechanism operate? Would non-violation be applicable?  Can other methods of compliance be explored?

·        How can primacy be given in the negotiations to developmental aspects  in line with the Doha Development Agenda? Given the current level of economic development of most developing and least developed Members, how can adequate, effective and mandatory special and differential treatment provisions be included?

Trade Facilitation Issues for further clarification in the CTG 

A number of issues require further clarification and reflection before an informed decision can be taken on whether or not to launch negotiations in this area. Following issues, which are only illustrative and not exhaustive need to be focussed on in the future work of the CTG:

·        What are the problems that Members have encountered in implementation of GATT Articles V, VIII and X?

·        What would be the estimated cost for developing and least developed members of undertaking commitments under GATT Articles V, VIII and X of GATT 1994 as suggested during the clarificatory process undertaken so far?

·        What would be an appropriate and effective mechanism for compensating developing and least developed members for the additional expenditure that they have to incur, to implement the new rules and procedures? 

·        What are the possible ways and means of ensuring that the development policy space of developing and least developed members is preserved?  

·        Given that some trade facilitation measures like authorised trader status can be discriminatory towards SMEs on account of comparatively lower volume of their trade and limited financial resources, what are the possible ways and means that could be adopted for fuller integration of SMEs in international trade through any possible agreement on trade facilitation?

·        What would be the mechanisms adopted for handling situations where the infrastructural facilities available in a Member country at different entry points vary widely?

·        Given that  ‘implementation capacities’ are an important factor in this area, would developing and least developed members be exempt from taking certain commitments due to lack of adequate implementation capacity?  If so, what are the parameters to determine the implementation capacity of Members?

·        In the light of security concerns, what responses can be crafted in possible new rules on trade facilitation to counteract such adverse effects on trade?  How far can principles like proportionality and necessity test operate for trade procedures adopted specifically to meet security concerns?

·        What is the nature of special and differential treatment?  Will it be limited only to extension of time frames or different levels of commitments? 

·        How can the concept of “enhanced technical assistance and capacity building” be operationalized?

·        Given that all the proposed new rules and procedures can only be in the nature of best endeavour principles what is the justification for binding rules? 

·        What possible methods can be envisaged for enhancing effective co-operation between customs authorities in the multilateral framework, which could complement the adoption of trade facilitative procedures?

1[1] The text reproduced below was previously circulated as WT/GC/W/514 and Corr.1.

 


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