Info Service on WTO and Trade Issues (Oct12/03)
10 October 2012
Third World Network
Expert panel addresses key issues in stalled Doha talks
Published in SUNS #7448 dated 1 October 2012
Geneva, 28 Sep (Kanaga Raja) -- An expert panel session at the World
Trade Organisation (WTO) Public Forum addressed some key issues in
the Doha negotiations, such as potential scenarios for the stalled
talks in the next year or two, the new trade narrative of global value
chains being espoused by some, and the issues of trade facilitation
and a plurilateral services agreement being pushed by some developed
The session, held on Wednesday, the final day of the three-day Public
Forum, was organised by the Our World is Not for Sale network, the
International Trade Union Confederation, the Third World Network,
and the South Centre.
The speakers on the expert panel on "Doha and the Multilateral
Trade System: From Impasse to Development?" were Ambassador Jayant
Dasgupta of India, Ambassador Angelica Navarro of Bolivia, Ambassador
Faizel Ismail of South Africa, Andrew Cornford of the Observatoire
de la Finance, and Deborah James of the Centre for Economic and Policy
Research (CEPR), who is also the coordinator of the Our World is Not
for Sale network.
The session was moderated by Martin Khor, Executive Director of the
South Centre. Kicking off the session, Khor said that the background
to this session was to look at what the future holds for the WTO and
in particular, in relation to the development dimension and the interest
of the developing countries.
He provided a comprehensive round-up of the negotiations from the
Uruguay Round to the current Doha Round.
He said that the theme of review and reform of the WTO to make it
more development-friendly versus ‘let's push ahead into new issues
and expand the power of the WTO' has been an underlying theme ever
since the formation of the WTO.
He added that in Doha (in 2001), where the Doha Development Agenda
(DDA) was launched, this again came into conflict, with developing
countries having many implementation issues and special and differential
treatment (S&D) issues on the agenda, whereas the developed countries
wanted to keep pushing the ‘Singapore issues' into a negotiation mode.
He said that in the DDA, implementation and S&D issues were given
the most prominence in terms of the sequencing, which is to be finished
first, before going into the in-built issue of agriculture and then
into TRIPS, with the Singapore issues to be launched at the next ministerial.
Developing countries, which had to pay a heavy price in the Uruguay
Round to bring agriculture - which had been left out of the trading
system for many decades - back into the system and its disciplines,
had again to pay a price at Doha for making the disciplines on agriculture
more effective. Today, there is still no solution to agriculture,
where the subsidies remain and have even increased, he added.
In the last two years, "we have seen many attempts to revive
the round but they have not succeeded. There are now attempts to have
plurilateral discussions particularly in services," he said,
also noting a proliferation of bilateral agreements.
"We are now faced with a trading system in which the changes
in the rules - whether they should go on, they should not go on, whether
there should be reform to make it development-oriented or the rules
should be reformed in order to have more market access and new trade
flows and where the link between multilateralism and plurilateralism
is - are all issues that we are facing, including what are called
the twenty-first century issues."
"Are they the unfinished development issues of the past or are
they the new issues that some members have tried to push but failed
to push, but continue to push, including investment, (government)
procurement and so on," Khor asked.
On the current status of the Doha Round negotiations, Ambassador Dasgupta
of India said that apart from trade facilitation (TF), there is just
no movement in any area in the negotiations currently. "Trade
facilitation is being pushed very aggressively and relentlessly by
the developed countries. The arguments which have been put forward
are that they are good for the developing countries; perhaps, the
implicit message is that ‘you don't know what is good for you. We
are telling you this is good for you, so please go ahead and accept
He said the attempt is to balance TF off against three issues - first,
Least Developed Country (LDC) accession, then the 28-Agreement specific
proposals of Cancun, and finally the S&D monitoring mechanism
relating to all the WTO agreements signed at Marrakesh in the Uruguay
"Now, what we have to see is whether within trade facilitation,
there is adequate balance between the demands of the developing countries
- if there are any - and whether trade facilitation as a package can
balance what is being given outside by way of the Agreement-specific
proposals, S&D monitoring mechanism and the LDC accession package."
The Indian envoy noted that the LDC group had said that in the case
of the LDC accession package, there are 33 LDCs who are existing members
of the WTO. There are three whose accession is almost complete because
they have made their offers, and it is almost 100% binding of all
their tariff lines in NAMA (non-agricultural market access) and agriculture.
Apart from these three, there are six or seven others who are waiting
in the queue, but whose accession may take place after 10 years or
"So, if you look at the accession package, it is not going to
benefit either the 33 existing members who are already there or the
three who are about to accede within the next few months or maybe
one year. And what it is going to provide is perhaps some degree of
flexibility over the next 15 years or 20 years for the rest of the
LDCs to accede at some point in the future."
He said that TF, very broadly speaking in academic literature including
in the World Bank studies, incorporates both export facilitation and
import facilitation. Export facilitation has been found to contribute
the maximum to global trade gains, and it is all about improving the
infrastructure, whether it is ports, roads, railways, or computerisation.
He added that the World Bank study, which is often quoted - of course,
out of context and in a very partial manner - says that there will
be $377 billion of additional trade gained from TF. But of that, the
majority comes from export facilitation, for which since the developed
countries are already at a high level in terms of their computerisation,
human resource development, and putting more men on the job, they
can adhere to whatever norms are laid down. So, they don't have to
pay anything; they don't have to really improve their infrastructure.
It is the developing countries who need to improve their infrastructure
for export growth, and that will not be paid for by the developed
countries. That has been made clear.
So, it is basically import facilitation and which the World Bank study
has concluded will account for just $33 billion against $377 billion
overall. So, only $33 billion of additional trade will result against
global trade volume of $14.5 trillion today. It is next to nothing,
the Indian envoy said.
Ambassador Dasgupta said that import facilitation is going to be done
mainly by the developing countries because the developed countries
have already done it. Now, if the developing countries are to do it,
they will have to improve their infrastructure relating to imports
- port handing facilities, customs, more people on the job, computerisation
etc. And obviously, their imports are also going to increase as a
That has to be balanced against some kind of compensatory mechanism
through which they get additional exports and for all this expenditure
which they incur on infrastructure, they need to be paid, and be assisted,
but that is not forthcoming.
On the 28 Agreement-specific proposals and S&D monitoring mechanism,
he said the two most important proposals out of the 28 Agreement-specific
proposals were duty-free quota-free (market access for LDC products)
and an LDC waiver on services, which have been taken out and on which,
it has been very clearly mentioned, "there will be no go, it
is just not possible."
The Indian envoy also pointed to some initiatives being taken by many
major developed countries, one being the Trans-Pacific Partnership
(TPP), and the second, the International Services Agreement (ISA),
as well as a host of bilateral or regional agreements on which they
are embarking. How is the ISA, for instance, going to militate against
the conclusion of the Doha Round? How is it going to work against
it? If you look at a plurilateral agreement of about 20 countries
representing about 70% of global trade, if that kind of agreement
gets signed, and it will be because most of them are involved with
each other in FTAs already, it will mean a very high level of ambition
and that level of ambition will be sought to be then transposed to
the WTO, and the developing countries and the rest of the membership
forced to accept it.
Pointing to agriculture and NAMA, he said that under NAMA, there are
two agreements which are in the offing - one is the Information Technology
Agreement 2 (ITA2), in which a very ambitious list of 357 tariff lines
has been drawn up and it will include any conceivable device which
has an electronic chip, the second being an agreement amongst the
APEC countries very recently on environmental goods.
"So, Information Technology Agreement, environmental goods, which
of course includes AC pumps, motors, the original list had included
refrigerators, air conditioners and various other things, which I
am sure will make a very slow but sure entry through the back-door
into that list. And that will take care of the industrial goods segment
of the sectoral demand for NAMA."
"So, where does that leave us? That leaves us with agriculture
sitting squarely in our lap and that will not lead to any conclusion
because there are problems in the developed countries about accepting
cuts on subsidies and on providing greater market access," he
On Global Value Chains (GVCs), he said that this has existed ever
since the dawn of civilisation. "The whole issue is how do we
move up the GVC, how do we provide more employment, more growth, [and]
better benefits to our own people? That is a question which UNCTAD
has addressed at great length over the past ten years, but nobody
is paying heed to that, because the new mantra is ‘global value chains
are the latest thing', as if it has, you know, appeared out of nowhere
On what happens after the Bali ministerial conference (in December
2013), Ambassador Dasgupta asked, suppose in one scenario, TF gets
harvested, some kind of environmental goods list gets harvested, some
kind of ITA2 gets finalised and concluded, what after that?
"After that, we apprehend there will be these new issues which
will start getting discussed in some form or the other here in the
WTO and they will form the agenda for the new round of discussions
which will be on a sectoral basis. This is not part of a single undertaking."
He stressed that the WTO is really faced with a crisis of reconciling
the different demands and ambitions of countries which have upwards
of $80,000 per annum of per capita income and countries which are
at $500 per capita income per annum or below.
"How do we reconcile these? How do we reconcile the development
needs, the aspirations, the pressing need of providing employment?
... That is something which we all need to have in mind, and we need
to look at trade not only from the mercantilist angle of more profits,
more zeros etc. We need to look at it through the prism of social
justice," he said.
Ambassador Navarro of Bolivia said: "We are firmly in favour
of fair, balanced multilateralism where everyone has a say on an equal
footing. We have what we have today and we have to think about what
the future holds. Unfortunately, the situation today and its future
"We started this century with a mirage, the idea of development
and re-balancing the trade system, at the centre of the World Trade
Organisation. Finally, there was to be a new negotiating round for
which we developing countries were not necessarily prepared but we
were promised a series of illusions."
More than ten years later, she said, "we realised that those
chimerical promises were nothing more than a means to ensure greater
opening of our markets. In other words, markets were the idea, and
we were to accept multinational corporations and companies from the
most powerful of the world's countries."
"However, masks have fallen and we are now facing what many call
an impasse in these negotiations," she added. "We would
prefer to call the current situation the lack of a political will
to ensure the multilateral trade system is adjusted in favour of the
As to why this is the situation, she said that this is because some
have an attitude which means that they want development to be development
in name only, and that means "lip service" is paid to development
now and again, but no more is done.
As to the main issues for the twenty-first century, the Bolivian envoy
said that it is clear from the point of view of her country, "first
of all, development, secondly, development, thirdly, development."
In the twenty-first century, "we cannot have a development round
based on free trade exclusively. It must promote trade that contributes
to balance among countries and regions and Mother Nature," she
said, adding that there is need for indicators that provide a way
of actually ensuring that trade rules are in keeping with sustainable
"Trade agreements must not impose conditions that have adverse
effects on human rights and the environment, and must not bring an
end to the values of our societies."
"The Doha Development Round is not a goal. It is rather a way
of beginning to introduce some balance into the system, and we therefore
must ensure that development is covered by the DDA. This is because
if properly determined, it can help countries move forward,"
Ambassador Faizel said that one of the favourite concepts being propagated
(as a way out of the crisis in multilateralism) is that of Global
Value Chains (GVCs).
He pointed to three research agendas in this area. The first is being
used by TNCs, which argue that this is good for development and growth.
The debate has been about the movement of capital across the world
and how does this advance the development of particular countries,
as well as how does it help countries to move up the value chain and
what share of value added they get. This has been debated, with UNCTAD
putting out a number of reports on the need to diversify, upgrade
and increase the share that poorest countries have on the value added.
The second way in which the idea of GVCs is being used is actually
reflected in the politics today. There is a backlash by people around
the world who feel that they are losing from the spread of globalisation
and the expansion of TNCs. Interestingly, he said, a massive backlash
is taking place today in the North - in the United States and Europe
- where people are saying that their jobs are being pushed out, and
they are talking about re-shoring and in-sourcing, and bringing back
jobs, rolling back globalisation and "putting the genie back
in the bottle."
The third way the concept is being used is an ideological one, he
added, and much of that permeates the corridors of the WTO where people
who are concerned about the lack of support or increasing hostility
to liberalisation that is being seen in many countries around the
world, and there is an interest in reviving support for trade liberalisation.
Many proponents of GVCs are arguing that the logic of globalisation
and GVCs suggest that the most efficient way to improve your chances
of participating, of gaining from globalisation is to reduce barriers
and increase efficiency of these GVCs, and participate in these GVCs.
They hope this argument will have the effect of gaining support for
liberalisation and improving the possibilities for the round itself,
and for the impasse to be broken, he said.
"I think this argument is flawed... and does not offer us a way
out of the current crisis," said Ambassador Faizel.
On the way forward, he said that there is need to begin a different
dialogue. One of the key principles to base the system on is fair
trade, equal opportunities, and levelling the playing field. The second
principle should be about capacity-building. Many countries don't
have the capacity to produce and export, and they need to be assisted.
Thirdly, the rules should be fair and allow everyone to act in ways
that promote their development. It should not close off opportunities
for development and policy space. It should be inclusive and allow
for the participation of countries.
"And the course that some of the proponents of global value chains,
and certainly some of the major players in this system are taking
today, the plurilateral route, the so-called variable geometry route,
these are going to marginalise even more many of the developing countries
and particularly the smaller countries from the system, because the
whole idea is based on starting with a few countries and then imposing
the will of the few on the rest."
"This is not a correct principle for multilateralism," the
South African envoy stressed. This narrative of GVCs does not add
anything really new to the debate. It really talks about more of the
same - more about trade liberalisation.
"It's a wrong analysis of reality because it talks of the market
as if it's a self-regulating machine. It doesn't provide a correct
policy response to the current crisis we have of globalisation, in
the WTO the crisis of Doha, and the crisis of multilateralism. Therefore,
we need a discourse, a new dialogue amongst developing countries,
between developing and developed countries, between NGOs and governments,
academics and intellectuals, about how we would want to rebuild this
multilateral system which was constructed ... by a few people in the
interest of the few. How do we construct this in a way which serves
the interests of all," he concluded.
In his presentation, Mr Cornford addressed the topic of GATS rules
and international trade in banking services.
He said that negotiation of the GATS rules for banking was completed
in the early 1990s, though countries' commitments only became part
of the agreement after negotiations were completed at the end of 1997.
While the GATS rules and commitments were actually being negotiated,
the overwhelming presumption of policy makers in advanced countries
was that "benefits" from the liberalisation of cross-border
financial transactions and of restrictions on the commercial presence
of foreign banks would accrue not only to their own financial institutions
but also more generally to other economies.
It was this presumption which largely shaped the outcome of the Uruguay
Round negotiations on financial services despite reservations expressed
principally by some developing countries. As a result, the GATS rules
have much more to say about what should be the limits on countries'
regulations, where these are a potential impediment to international
trade in financial services, than about the contents of the right
to regulate and the development of the statistical data required for
valuing offers and commitments, compensation in disputes, and procedures
for safeguard actions.
"Since the early 1990s, the international banking landscape has
undergone far-reaching changes. Some of these changes have important
implications for regulation, especially in the light of experience
during the financial crisis. Of special importance here are transactional
innovations, which have required substantial revision of the Basel
rules for banks' capital and risk management; greater acknowledgement
of the connections between financial stability and macro-economic
policy, which is leading to the development of guidelines for macro-prudential
policy; and the greater role in international financial markets of
Large Complex Financial Institutions, whose size and the diversification
of whose activities have the consequence that their failure is capable
of posing systemic threats to financial stability."
Moreover, he added, the large and potentially destabilising capital
flows experienced in connection with the crisis has led to further
rethinking concerning the role of capital controls as a protective
measure and of the relation between such controls and prudential measures.
He noted that the bail-outs of large banks in the United States and
some Western European countries since the beginning of the financial
crisis, arguably the largest programme of sectoral support by governments
in modern history, have implications for policy towards the granting
by countries of market access to foreign banks that have benefited
directly or indirectly from such support.
"The scale of the subsidisation which this life-support has entailed
is markedly at variance with assumptions about the overall soundness
of the financial sectors of developed countries prevalent in the early
1990s, which, understandably, were part of the mind-set of the negotiators
of the GATS rules.
"So far, negotiations and other work on banking services in the
WTO have seemed little affected by the need for fundamental rethinking
in the light of the experience of the financial crisis. However, international
initiatives currently being developed in other international institutions
are likely to produce a substantially reformed Global Financial Architecture."
Cornford went on to highlight a number of specific concerns that have
been raised by the Stiglitz Commission, UNCTAD, Barbados at the WTO,
and NGOs such as Public Citizen (PC).
Also, in June 2012, Ecuador submitted a proposal that the WTO should
monitor and review developments related to the global financial crisis
owing to the importance indicated by the crisis of a safe regulatory
framework assuring WTO member states of the availability of policy
tools to prevent intensification of the crisis. Ecuador's main concern
is systemic - that member countries should have the capacity to safeguard
the stability of their financial systems on the basis of a clear,
agreed understanding of WTO regulations.
From the point of view of developing countries, the increased emphasis
under macro-prudential policy on the links between the stability of
the financial sector and macroeconomic stability, more generally leads
logically to greater acknowledgement of the links between macro-economic
stability and development policy, since in such countries there is
an integral connection between such stability and the achievement
of development objectives.
Such links are evident in the particularly severe threats which macro-economic
instability poses to the livelihoods of people with very limited means
and limited or non-existent access to social safety nets, and to the
disruption of the investment required for structural transformation.
"This acknowledgement is reflected, for example, in thinking
about the appropriate policy response to the large and potentially
destabilising capital inflows experienced by some emerging-market
countries since the outbreak of the financial crisis. That prudential
measures and capital controls are closely related substitutes for
the purpose of avoiding macroeconomic instability from this source
is now much more widely accepted."
In the text of his presentation, Cornford also drew attention to data
and measurement problems under GATS rules. In several areas, the absence
not only of statistical data but also of generally established measurement
procedures is likely to prove a serious impediment to application
of the GATS rules to international trade in banking services.
For example, the resulting problems include valuing countries' commitments,
especially under Modes of Supply 1 and 3, the assessments of trade
in banking services prescribed under Article XIX, and estimating the
effects of emergency safeguard measures and subsidies (once rules
concerning these subjects have been negotiated) as well as the effects
of the modification of schedules. In the case of schedule modification,
not only statistical data but also guidelines as to how measurement
should be carried out are lacking.
Statistical and methodological problems were the inevitable consequence
of the much more widespread and intrusive extension of multilateral
trade rules into subjects covered by countries' domestic regulatory
regimes which resulted from the negotiations on international trade
in services in the Uruguay Round. When the GATS was negotiated, policy
makers from major developed countries did not consider deficiencies
of statistical data a serious obstacle to the undertaking of commitments
as to the liberalisation of cross-border services transactions owing
to the widespread conviction in such countries that liberalisation
would benefit the countries granting improved market access as well
as those seeking it.
"This view was not necessarily shared by the developing countries
potentially facing substantial losses of policy sovereignty. However,
the issue was sidelined during the Uruguay Round negotiations, and
only in 2002 was a manual published on statistics for international
trade in services."
However, Cornford said, this manual does not address the important
practical problems of developing statistics for international trade
in banking services.
Cornford also highlighted some possible ways forward, noting that
many critics of the GATS suggest revising particular GATS rules.
Public Citizen has proposed that the contentious second sentence of
the Prudential Defence Measure of the Annex on Financial Services
("Where such measures do not conform with the provisions of the
Agreement, they shall not be used as a means of avoiding the Members'
commitments or obligations under the Agreement") be replaced
with: "For greater certainty, if a Party invokes this provision
[the Prudential Defence Measure] in the context of consultations or
an arbitral proceeding initiated under the Dispute Settlement Understanding,
the exception shall apply unless the Party initiating a dispute can
demonstrate that the measure is not intended to protect consumers,
investors, depositors, policy holders, or persons to whom a fiduciary
duty is owed by a financial services supplier, or is not intended
to ensure the integrity and stability of the financial system".
The intention here is that the burden of proof in cases in which recourse
to the Prudential Defence Measure is challenged would be more explicitly
the responsibility of the challenger, said Cornford.
According to Cornford, a more ambitious revision of the GATS rules
which would reflect the thrust of many of those supporting revision
would be to include a concrete spelling-out of the scope of governments'
right to regulate the financial sector in the Annex on Financial Services
- a revision which would also require a note to Article XVI. 2 cross-referencing
its implications for the Article's specification of limitations to
market access to be included in countries' schedules.
Such a revision would have to be made in accordance with Article X.
5 of the Marrakesh Agreement, which states the following: "Except
as provided in paragraph 2 above [which references the provision concerning
Most-Favoured-Nation Treatment in Article II: 1 of the GATS], amendments
to Parts I, II and III of the GATS and the respective annexes shall
take effect for the Members that have accepted them upon acceptance
by two thirds of the Members and thereafter for each member upon acceptance
"However, that revision is possible under WTO rules does not
imply that it would be anything but extremely difficult to achieve
the required degree of consensus concerning such a change among member
Another possible way forward, he said, would be simply to rely on
hope that negotiations on banking services will be consigned to a
back burner (possibly as part of a similar fate for other issues which
have been negotiated as part of the Doha Round). This might be described
as the strategy of "letting sleeping dogs lie".
However, such hope may reflect excessive optimism as to the likelihood
that the dogs will indeed not be awakened owing to the zeal of countries
determined to push financial liberalisation through the WTO. There
is thus a strong argument that the likely continuation of such pressures
justifies recourse to an explicit multilateral decision rather than
reliance on the more passive process of consignment to a back burner.
One possibility might be a decision to suspend negotiations on financial
services sine die. This would end pressures on developing and emerging-market
countries through (plurilateral or multilateral) negotiations to undertake
commitments to liberalisation which not only might be against their
perceptions of their best interests but which might also actually
compromise introduction of domestic banking reforms that are an appropriate
response to the experience of the financial crisis.
Such a suspension might leave in place for some countries what are
now inappropriate commitments undertaken during the Uruguay Round
negotiations. In favour of such a suspension, it is reasonable to
assume that regulatory changes inconsistent with these commitments
which could nonetheless be defended under the existing Prudential
Defence Measure would not be subject to challenge under Dispute Settlement.
An alternative approach, would be for countries themselves to include
in the head-notes to their schedules those parts of their regimes
of prudential regulation which they believe should not be subject
to challenge. Agreement to so proceed should be easier than agreement
on revision of the GATS rules.
Inclusion in countries' schedules of text from national prudential
regulation would make the already lengthy GATS agreement unwieldy.
However, inclusion of actual text in the GATS could be replaced by
the more concise solution of specification of hyperlinks to the address
where the relevant text would be available, he concluded.
Ms James of CEPR, referring to WTO Director-General Pascal Lamy's
WTO panel on defining the future of trade, said "we have seen
this show before", adding that back in the 1980s, when negotiations
to launch the Uruguay Round were at an impasse, then Director-General
Arthur Dunkel did a very similar tactic by convening a panel - the
Leutweiler panel - to write a report, but he could not get the membership
to support it financially and he had to go to the City of London,
so that the financial sector could pay for it.
They came out with a report and ultimately led to the launch and conclusion
of the Uruguay Round that "gave us the WTO and the very big asymmetries
that we have all been living with for the last 15 years."
"So, we don't want to see that happen again. But we believe that
the Lamy panel is part of a strategy on behalf of the developed countries,
but also the Secretariat to actually move forward this new trade narrative
... talking about the global value chains and the need for trade facilitation
and the plurilateral services agreement as the lubricant for those
global value chains," she added.
"We expect a panel report sometime next April that will be written
by the Secretariat. You can imagine those luminaries on that panel
... are not going to share a Google document," she remarked,
adding that it is going to be written by the Secretariat and it's
going to have their perspective, and "that is going to be used
then to narrow the debate about what is possible."
"And that's why I think it's so important to have these alternative
voices of actually people who are representing the folks who are going
to be affected by the negotiations, and not just you know, the CEO
of GE (General Electric) looking at how they can make more money out
of changing WTO rules, but looking at fixing the existing rules that
we have," she said. +