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Global Trends by Martin Khor

Monday 8 December 2003


WTO WRANGLE OVER  THE “SINGAPORE ISSUES”

BLURB:    Should the World Trade Organisation establish new agreements on four new topics, known as the “Singapore Issues”?   Or should the attempt to start negotiations on them be abandoned in the wake of the Cancun Conference’s failure?  These are some of the major questions engaging WTO members at the moment.  Last week, a meeting was held in Geneva to deal with these Singapore issues.  Views were aired, but no solution found yet. 

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Member states of the World Trade Organisation are wrangling over what to do about the so-called “Singapore Issues” that have been its most controversial subjects the past many years.

Disagreement over these issues was the immediate cause of the breakdown of the WTO’s Ministerial conference in Cancun last September,

Last week, an informal meeting was held to discuss them at the WTO headquarters in Geneva.  There were differences of view, some confusion and no conclusion as yet.

The “Singapore issues” are investment, competition, trade facilitation and transparency in government procurement.   They were introduced as subjects for discussion (but not negotiations) at the WTO at its inaugural Ministerial Conference in 1996 in Singapore, hence the name “Singapore issues.”

Since then, major developed nations (especially the European Union) have been pressing that the discussions on these issues be “upgraded” to negotiations for new binding agreements.   But most developing countries have resisted.  They do not want new binding WTO rules that restrict their present freedom to regulate investments or to assist local businesses. 

They fear, for example, that the proposed new rules would expand the coverage of the WTO principle of “national treatment”,  whereby foreign firms and their products cannot be treated “less favourably” than local firms and products.  This would discourage or prohibit some government policies and practices that give advantages, preferences or favourable treatment to locals, with serious economic, social and even political effects.

At Cancun, more than 70 developing countries made very clear they were not prepared to begin negotiations on the four issues.  And Malaysia was the most prominent of these countries leading that battle.

On the last day of the Cancun meeting, the European Union’s Trade Commissioner, Pascal Lamy, made a dramatic offer to “drop” three issues from the WTO altogether, provided negotiations begin on the remaining issue, trade facilitation.

He had first “dropped” investment and competition.  But when some countries, including Malaysia, said they could also not accept negotiations on “government procurement”, Lamy apparently also agreed to drop that too, according to some officials present.

About 90 countries belonging to the African, Carribean and Pacific (ACP) Group and the Least Developed Countries Group met to discuss this offer.  They were glad that three issues were being dropped altogether.  But they could not agree to start negotiating the fourth issue.  

In the more than two months after Cancun, the WTO member states have been pondering over the status of the four Singapore Issues.   Since the European Commission (EC) had already offered to drop three issues, would they remain “dropped”, or would an attempt be made to pick them up again?

On 3 December, at a “Green Room” meeting (chaired by the WTO’s General Council chairman) to which only 30 delegations were invited, many developing countries indicated they would like three or at least two of the Singapore Issues to be dropped completely from the WTO.   This would mean no negotiations would proceed, and also that the discussions on them cease.

They said the present talks in Geneva should start from the Lamy offer in Cancun to drop three (or at least two) issues.

The EC representative said it was willing to drop two or even all four of the issues from the Doha Development Agenda, the WTO’s current work programme.

But it was not immediately clear what it meant by that, as the EC also indicated it wanted a plurilateral approach to negotiations if there is no consensus for a multilateral approach on some of the issues.

In a multilateral approach, all members negotiate and join an agreement, whilst in a plurilateral approach each member is free to join or not.  Being a multilateral organization, rules in the WTO are expected to be adhered to by all.

Commented a trade diplomat:  “What the EC seems to mean now by dropping from the Doha agenda is not the same as what they meant in Cancun when they then said dropping from the WTO agenda.”

Several developing countries also spoke against the WTO adopting a plurilateral approach to the Singapore Issues, saying that the WTO is a forum for multilateral trade negotiations.  Some said that if the plurilateral approach was accepted for Singapore Issues, it would set a dangerous precedent which could be followed by many other issues entering the WTO through the plurilateral route.

According  to trade diplomats, the General Council chairman, Carlos Perez del Castillo

of Uruguay, put forward a “2 plus 2” approach in which negotiations would be launched for two issues -- trade facilitation (TF) and transparency in government procurement (TGP) -- whilst on two others (investment and competition) the issues could be further discussed and lead on to some options including plurilateral negotiations.

This proposal found favour with some developed countries, but it was rejected by most developing countries present.

The EC reportedly acknowledged that a considerable number of members may not be ready to contemplate multilateral rules on Singapore issues.  It said it was prepared to unbundle the issues (deal with each one separately), to deal with them outside the “single undertaking”, and to discuss them with those members that were prepared to do so.  This was taken by diplomats present to mean a plurilateral approach to negotiations.

It added later that it was willing to drop two or more of the Singapore issues from the Doha Development Agenda.  What this actually meant was however not clear to many present.

Canada, Switzerland and the US indicated they could proceed on the basis of the Chairman’s “2 plus 2” proposal.

Botswana, speaking for the ACP Group, did not agree to a plurilateral approach as this may undermine the multilateral system.   Instead of the Chair’s “2 plus 2” approach, it suggested a “2 plus zero” approach, where two issues are dropped from the WTO.

Of the remaining two issues, discussions could proceed on the basis and condition that there must be explicit consensus on modalities, that there be progress on the development issues, there would be no legally binding commitments, and that technical and financial assistance be provided to developing countries to meet the cost of compliance and implementation.

Botswana referred to the EC’s offer to drop two or three issues in Cancun, and to the Cancun Statement that the work in Geneva should be based on the valuable work achieved in Cancun.  He urged the Chair to make use of the “2 plus zero” approach as the “2 plus 2” approach was confusing.

Kenya said that its Minister was in the Green Room in Cancun where the proposal to “shred” three issues had been made by the EC, and Kenya understood this to mean dropping these issues from the WTO work programme completely.  Provided the three issues were dropped, it was prepared to advise its capital to look at the remaining issue (TF).

On the proposed plurilateral approach, Kenya said the members should avoid changing the WTO’;s function, which is multilateral negotiations on trade.  Moreover, issues that do not directly involve trade (three of the Singapore issues) are not appropriate and not permitted.

South Africa said the trade system should have more equitable and development friendly rules.  The Singapore issues would place enormous burdens on members. Referring to the EC offer in Cancun to drop two issues, it said this was a positive development, but what had happened to this offer?  It did not support plurilateral rule making as this would create a two-tier membership system which should be avoided.

Indonesia said it would like the talks to start from the position of the final hours in Cancun, when the EU had said it could drop three issues, and therefore there was now only one issue on the table.  China reportedly said it was willing to look at clarification of one of the issues (TF), provided the other three issues are dropped completely from the WTO.

India said many issues were still unclear and complex and the expansion of the WTO agenda would place strain on weaker members.  It added the plurilateral approach would be very difficult for the WTO.  If it started with the Singapore Issues, this would be the start of a slippery slope.  In future, other issues such as trade and labour, environment and geographical indications could also be made subjects for plurilateral agreements.

Malaysia stressed that WTO members should concentrate on the development issues first before the Singapore issues.  Malaysia and other countries had submitted documents relating to the areas and issues requiring clarification and to date there had not been a response.

Brazil reportedly said if there was enough progress in agriculture, this might influence them on Singapore issues.  It stressed however that there must be explicit consensus first on modalities before any negotiations could be launched. Brazil was also against a plurilateral approach.

At the end of the meeting, Perez del Castillo said the discussion was useful. Some members had shown interest to focus on TF provided that three other issues be dropped from the WTO.

Other members had shown interest to get multilateral rules on two issues (TF and TGP) while others still felt there was a need for more exploratory work on TGP.

On the other two issues (investment and competition), some proposed to drop them from the WTO, others to keep them, and others to explore the plurilateral approach, whilst others were in favour of putting them aside for now and looking at them later.

This conclusion itself shows the state of flux of the current discussions, and of the many options in the fate of the Singapore issues.

Several developing-country diplomats complain that the time and energy spent on these controversial non-trade issues was diverting the WTO from its core trade areas of agriculture, industrial products and services.

Whether the Singapore issues (or some of them in any case) will be dropped, or whether the issues and the controversy surrounding them stay on the WTO agenda, remains to be seen.  The next weeks are crucial for a final decision.

 


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