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TWN Info Service on WTO Issues (Nov03/12)

26 November 2003

Third World Network

Dear friends and colleagues

FOUR ARGUMENTS AGAINST A PLURILATERAL APPROACH TO SINGAPORE ISSUES IN WTO

Recently the European Commission has been reviving the concept of using a “plurilateral approach” to the Singapore Issues in the WTO.

In this approach, there would be negotiations to establish agreements on the four Singapore Issues (investment, competition, transparency in government procurement, trade facilitation) or at least some of them.  But WTO members can choose to join or not join the agreements.

This approach has also previously been called an “opt-in opt-out” approach.

The plurilateral approach has also been mentioned as an option, at least for some Singapore Issues, by the WTO General Council chairman, during his recent “informal consultations” in the WTO.  However, many developing countries voiced their opposition to this approach at the most recent informal consultation on Singapore Issues about a week ago.

Several United Kingdom development NGOs have now issued a paper, “Four Arguments Against a Plurilateral Approch to the Singapore Issues.”   The paper is written by Duncan Green and Claire Melamed on behalf of CAFOD, Christian Aid, Oxfam, World Development Movement and ActionAid.

It is a well argued paper, and also timely in view of the “internal reflections” exercise of the European Union at present.

Below we reproduce a slightly edited version of the paper for the benefit of our readers.

With best wishes

Martin Khor

Third World Network

 

 

FOUR ARGUMENTS AGAINST A PLURILATERAL APPROACH TO SINGAPORE ISSUES IN WTO

By Duncan Green (CAFOD) and Claire Melamed (Christian Aid)

In its 30 October 2003 paper entitled ‘Singapore Issues - Options post-Cancún’, the European Commission proposed a plurilateral approach to the issues of investment and competition policy within the WTO. It laid out two plurilateral options:

Option 1: “Optional Participation”, where all WTO members would participate in the negotiations, but then would decide separately whether to sign up to any agreement. The Commission describes this as a ‘”GATS” type of process’.

Option 2:   “ITA model”, where only a limited number of WTO members would take part in negotiations. The precedent is the Information Technology Agreement, initially  negotiated in 1996 by 14 WTO members.

Several leading UK development NGOs (CAFOD, Christian Aid, Oxfam, ActionAid, and World Development Movement) have prepared this paper to set out their arguments against the EC proposal, which they see as posing a serious threat to efforts to revive the  Doha round, following the collapse of the Cancún ministerial.

We have the following four arguments against a plurilateral approach:

·        The EC proposal will poison attempts to restart negotiations in Geneva.

·        Developing Countries are likely to come under serious pressure to sign up to a ‘voluntary’ plurilateral agreement, and to sign up on unfavourable terms.

·        Many of the pre-Cancún arguments against a multilateral  investment agreement at the WTO are equally relevant to a plurilateral agreement.

·        A plurilateral agreement would become the focus of major international opposition.

Below are more details of the arguments.

Firstly, The EC proposal will poison attempts to restart negotiations in Geneva. The plurilateral option has already received a ‘cool reception’ in Geneva.

At a WTO informal meeting on 12 November, the Chairman of the WTO  General Council proposed a ‘2+2’ option on the Singapore Issues similar in content to the EC’s position.

Under this, negotiations would begin immediately on multilateral agreements on transparency in government procurement and trade facilitation, while investment and competition would be referred back to the relevant working groups for further clarification, leading to several possible outcomes, including plurilateral negotiations.

Countries including Argentina, Brazil, China, Indonesia, the Philippines,Bangladesh (on behalf of LDCs) and Mauritius (on behalf of the Africa Group) all objected strenuously to the manoeuvre, as did Canada.

Developing country opposition could hardly be clearer. In the three months prior to Cancún, 101 developing countries signed public statements that they did not want to begin negotiations on investment and competition policy.

At Cancún itself, more than 70 developing country WTO members reaffirmed their opposition and the impasse over the Singapore Issues eventually triggered the collapse of the ministerial and a severe set-back for the Doha round.

Prior to Cancún, developing countries had already rejected a proposal from the EC for a plurilateral option. If the WTO’s consensus principle is to mean anything, such a glaring lack of consensus must be accepted by the EC as a reason to drop its demands.

In the final hours of the ministerial, the EC offered to drop investment and competition from the agenda altogether. In their final press conference, both Pascal Lamy and Agriculture Commissioner Franz Fischler stressed that the proposals put forward by the Commission in Cancún, including on agriculture and the Singapore issues, would remain on the table.

In the Ministerial’s final statement, members agreed to ‘bring with us into this new phase all the valuable work that has been done at this conference.  In those areas where we have reached a high level of convergence on texts, we undertake to maintain this convergence while working for an acceptable overall outcome.’

Since a high level of convergence was undoubtedly achieved on dropping investment and competition from the agenda (only Japan and South Korea opposed the move), any attempt to reintroduce them as a plurilateral option can arguably be seen as running counter to the final ministerial statement (which the EC signed).

EU member states reportedly think that a plurilateral option will not be as controversial as a multilateral agreement - they should remember that the MAI was a plurilateral agreement. It would be inexcusable if the EC was once again allowed to derail the Doha round due to its insistence on a broad agenda, including the Singapore Issues.

Secondly, developing countries are likely to come under serious pressure to sign up to a ‘voluntary’ plurilateral agreement, and to sign up on unfavourable terms

The plurilateral proposal leaves developing countries with an unenviable choice: take part in negotiations that the majority of WTO members have made clear they do not want, or risk being forced at a later stage, whether by bilateral, multilateral or investor pressure, to sign up to an agreement they have had no part in negotiating.

Acceding countries are particularly vulnerable to pressure, even if in theory the agreement is a voluntary one.  Between 1995 and 2002, 14 of the 15 countries that acceded to the WTO, (Ecuador being the exception), signed up to the plurilateral Agreement on Government Procurement.

Countries as diverse as Russia and Vanuatu have been open about the pressures they have faced to sign up to plurilateral agreements.  Vanuatu, for example, was required by the US to sign up to the Agreement on Civil Aircraft, despite the fact that it neither buys nor produces aircraft. This demand was rejected, and Vanuatu is still not a member of the WTO.

Moreover, late arrivals have often received less favourable terms than the original negotiators of agreements - most late signatories to WTO agreements have had to make substantial concessions, with many developing countries signing away their rights to special and differential treatment in the course of accession negotiations, despite the fact that these were integral to the original agreements.

For example, China and other developing countries acceding to the WTO were denied the use of Article 6.2 of the Agreement on Agriculture, granting developing countries the right to use some types of domestic support for low income or resource poor farmers.

Thirdly, many of the pre-Cancún arguments against a multilateral investment agreement at the WTO are equally relevant to a plurilateral agreement:

·        A new set of complex negotiations would add to the overloaded Doha agenda

·        A plurilateral investment agreement would not increase FDI flows to the poorest countries

·        Non-discrimination is not a successful development strategy

·        A plurilateral investment agreement at the WTO would not balance rights and responsibilities  of host countries, home countries and investors

·        A plurilateral investment agreement would not see the end of bilateral investment treaties

Fourthly, plurilateral agreements would become the focus of major international opposition.

A plurilateral approach to an international investment agreement has already been tried, and rejected, once.  The multilateral agreement on investment (MAI) negotiations, under the auspices of the OECD, were an attempt to do just what the EC is now proposing.

These collapsed under the weight of internal opposition, backed by a huge international network of civil society groups.

At the time of its defeat, anti-MAI campaigns were known to be active in more than half of all OECD countries and numerous developing countries.  Its plurilateral nature was one of the key factors of concern to civil society, contributing to the sense that the deal lacked international legitimacy, and was skewed in favour of investors at the expense of governments’ right to regulate foreign investment.

The WTO, and the multilateral trading system, can ill-afford such a mobilisation against an agreement that is already opposed by the majority of its own members.

In conclusion, the Doha ministerial launched what it optimistically termed a ‘development agenda’. That process was severely set back by the breakdown in Cancún. Only by listening to and, more importantly, acting upon the views of developing countries can the developed countries hope to revive the vision of Doha.

On Singapore Issues, that means that at the very least, the EC should drop those issues it agreed to abandon in Cancún. These are investment and competition policy, and perhaps transparency in government procurement (it remains unclear, but numerous sources claim that Pascal Lamy offered to drop all three in the final Green Room in Cancún).

Preferably, however, the EC should demonstrate both the political leadership and the grace to drop all four, and concentrate on the issues that really matter to development.

NOTE:   This paper was written by Duncan Green of CAFOD and Claire Melamed of Christian Aid, on behalf of the following UK development NGOs:  CAFOD, Christian Aid, Oxfam, ActionAid, and World Development Movement.  To contact the authors or groups, write to cmelamed@christian-aid.org.

 


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