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Global Trends by Martin Khor

Tuesday 23 Dec 2003


MANY WAYS TO ‘DROP’ AN ISSUE

BLURB:   The major development at the World Trade Organisation’s meeting last week was the proclamation by developing countries that they want most of the Singapore Issues to be dropped completely from the WTO.  This has sharpened and clarified the positions in the WTO for up to now the main advocate of these issues, the European Commission, has been trying to go back on its word that it is prepared to drop the issues.  It seems there are many ways of offering to drop an issue without really doing so.

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There are many ways to skin a cat, so the old saying goes.  I never understood what it quite meant.  Why would anyone do something as cruel and senseless as skin a cat?

However, it has been commonly used to mean that there are different ways of doing or achieving something.

Last week, another variant of that saying occurred to me as the World Trade Organisation wound up its work for the year with a General Council meeting that was meant to follow up on the failed Cancun Ministerial Conference.

The most – perhaps the only – important development at that meeting was the emergence of clear and strong opposition of the developing countries to the so-called Singapore Issues.

They called for further work on three of the issues – investment, competition, and transparency in government procurement -- to be “dropped”.   They can go along with the fourth (trade facilitation) but only to clarify the issues and not start negotiations for a legally binding agreement.

“Dropping” the Singapore issues, or some of them, has become the most talked-about new phrase in the WTO since Cancun.  But it has also becokme clear that there are many ways of dropping an issue.

More precisely, different parties can may mean different things when they say “drop the issues.”    Some are perfecting the art of saying “drop” without intending to really drop.

The developing countries never wanted these issues in the WTO in the first place.  They are concerned that new WTO rules in these areas would prevent governments from regulating investments and financial flows, from assisting local firms, and from having the right to choose policies or priorities in government procurement.  

But the four Singapore issues were pushed onto the WTO by the European Commission, the US, Japan and Canada through intense pressure and at exclusive Green Room meetings at Ministerial conferences in Singapore in 1996 and Doha in 2001.

Due to the way they were undemocratically introduced, the issues have been controversial and lacked legitimacy.  Since then discussions have taken place in working groups, and many developing countries have resisted the pressures to upgrade the discussions into negotiations for new agreements.

This reached a new level at Cancun when over 70 countries led by Malaysia, India, Botswana and Kenya proclaimed they were not prepared to begin negotiations on any of the four issues.

The unity and widespread resistance unnerved the European Commission that had hitherto projected the fiction that only a couple of countries were opposed.

On the final day, the European Trade Commissioner Pascal Lamy made his famous offer to “drop” two issues (investment and competition) and even a third (government procurement) from the WTO agenda. 

Many officials present said his meaning of “drop” was clear, that negotiations would not start on the issues, and moreover the issues would no longer be discussed at the WTO.  In effect, the working groups would even close.

Lamy later told a press conference in Cancun that his offer would remain on the table, even though the conference ended without agreement.

This was a rather sensational development.  For at one swoop, two or three of the issues seemed to have disappeared from the table.  As became common talk, once the eggs have splashed on the floor, they cannot be put back again.

But since Cancun, the EC has confused the WTO members on what its position is.  Having “dropped” the issues, and having promised to maintain the offer, it seems to be trying to salvage the situation by retrieving the issues whilst keeping a façade that it will agree to “drop” the issues if that is the wish of the developing countries.

It seems there are many ways to drop an issue, and many meanings to the word “drop”.

The EC said in their internal papers and at WTO meetings that they are prepared to drop any or all of the Singapore issues from the “single undertaking.”  Also, it wanted plurilateral agreements (where members can choose whether or not to sign on) if multilateral agreements (where every member has to sign on) were not possible.

The single undertaking is a framework established in Doha in 2001 that all issues being negotiated for new rules or for changes in existing rules would be considered as a package which everyone has to accept as a whole, and negotiations would end at the same time, at the end of 2004.

It is unclear what the EC exactly means by “dropping from the single undertaking.”  But it is certainly not the same thing as the Cancun offer of “dropping altogether from the WTO”. 

As many developing countries have told the EC,  its offer to drop from the single undertaking is not a concession, as the Singapore issues were never part of the single undertaking in the first place.

Moreover, dropping of the issues from the single undertaking is really a way of keeping the issues alive, and thus skirting around the offer of removing them altogether from the WTO.

By stating that an issue is withdrawn from the single undertaking, it can still be retained within the WTO in at least the following ways:  

First, start negotiations for multilateral rules now but do not complete them at the same time as other issues, and continue talks into the next Round when new agreements can be established.

Second, start negotiations for plurilateral rules now and complete them in this Round at the same time as other issues, but since members can choose not to be party to the rules, this can be said to be outside the single undertaking.  Or else complete the plurilateral negotiations in the next Round.

Third, continue the discussions in the working group without a commitment to upgrade them into negotiations, and carry the discussions over into a next Round during which they can then be upgraded.

These three options would keep the issue alive, with the hope that ultimately new rules will be created in the WTO, with some if not all members being party.  The issue would thus be “salvaged” from the real dropping that Lamy had proposed in Cancun.   The broken eggs could thus be re-assembled in some fashion or even completely.

In the informal meetings at WTO since Cancun, the EC caused a great deal of confusion when it told others it was willing to drop one, two, three or even four issues from the single undertaking and from the Doha agenda, and yet that it wanted all four issues to remain in the WTO.  No one knew exactly what the EC had in mind, and neither could the EC explain precisely what it meant.

In retrospect, it must be seen as a tactical move by the EC to “test the waters”, to gauge what the developing countries were willing and not willing to accept, on each and all of the Singapore issues.

Indeed, many developing countries were also not very clear what they were demanding, when they themselves used the word “drop.”

Last week’s WTO meeting has helped clear the air of some of the confusion. Firstly, 45 developing countries issued a joint paper, presented orally on their behalf by Malaysia, referring to Lamy’s Cancun offer, and calling for further work on three Singapore issues to be dropped.

The meaning of this “drop” was clear.  There would be no more discussion on these issues in the WTO, let alone any negotiations.   Discussions to clarify the fourth issue, trade facilitation, could go on.

Indeed, some of the countries sponsoring the paper asked explicitly that the working groups do not convene again, at least until the political question of how to resolve these issues is settled.

Secondly, the alliance of 90 countries in three groupings (Africa Union, African, Carribean and Pacific Group, and Least Developed Countries), told a press conference that ideally the Singapore issues should be dropped completely from the WTO.

“If this happens, it would signify an important principle, respect for the will of the majority of members,” said Botswana Ambassador Charles Ntwaagae, who coordinates the ACP Group.

The 45 countries and the Group of 90 also opposed any plurilateral approach to the Singapore issues.

So at least from last week’s meeting, a large number of developing countries have made clear they want the Singapore issues (or at least three) dropped, and what they mean by “drop.”

The EC and other advocates of the issues must now be assessing the latest situation, and possibly how to continue to play with the different variations of dropping yet not dropping the issues.

At the end of the meeting, General Council chairman, Carlos Perez del Castillo of Uruguay, continued to insist on his “two plus two” proposal of trying to agree to modalities for negotiations on two issues (government procurement and trade facilitation) whilst suspending work in the meantime for two other issues (investment, competition).

But many developing countries spoke against this.  They want to close the work completely on three issues, whilst discussing (but not negotiating) only trade facilitation.

When the WTO resumes its work in the new year, the resolution of the Singapore Issues will be among the most urgent of the tasks.

There is another saying, that the cat has nine lives.  Maybe the EC is relying on this, so that it can find ways to skin the cat whilst keeping it alive.

But the developing countries have called the EC’s bluff.   They want the EC to keep to its original Cancun offer of “dropping”, and not a diluted and different variation of “drop.”

Let’s see how the battle is resolved, or not resolved, next year.

 


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