No new issues at WTO without prior UNCTAD examination

by Chakravarthi Raghavan

At a Ministerial round-table of UNCTAD-IX, a senior Indian trade official called for a complete embargo on new issues in the WTO trade agenda and has asserted that any new issues should be subject to stringent scrutiny by UNCTAD.

MIDRAND: There should be a complete embargo on new issues on the agenda of the World Trade Organization (WTO), unless these have been carefully examined in UNCTAD, India said on 1 May at a Ministerial round-table at the Ninth Session of the UN Conference on Trade and Development.

The Secretary (permanent official) of the Commerce Ministry of India, Mr. Tejendra Khanna made this comment at the Ministerial round-table at the Conference devoted to the theme of "the Uruguay Round World".

The comments and questions from several of the participants at the hour-long session brought out that developing countries, and particularly the least developed countries (LDCs), faced very difficult problems of implementation of the Uruguay Round agreements, that due to the way some of the agreements were being implemented as well as the lack of capacity in many of the developing and least developed countries to produce and export, meant that while there may be "opportunities", they can't take advantage and the rules of the system became irrelevant to them.

New issues should be examined in UNCTAD

Khanna said India found "strange" the attempts to bring up new issues in the new trade agenda. "We don't revise the constitution of countries every two years, nor do we change traffic laws every two years. We have great difficulty in agreeing to the view that every two years, when a Ministerial meeting of the WTO takes place, a fresh set of trade issues should be brought in and international trade rules framed."

"If there are new issues, they should be subject to very careful examination and analytical work in UNCTAD on all the implications and the balances of advantages and disadvantages analyzed and disseminated to the people interested in it." "There should be a complete embargo on new issues in the WTO agenda unless it has been subject to very careful examination in UNCTAD.

On all these new issues like investment, labour standards... we have to devote considerable time to understand the difficulties and details, before we can proceed further."

In introducing and annotating the topic, the Deputy to the UNCTAD Secretary-General, Mr. Carlos Fortin, noted that globalization and liberalization was resulting in pressures for further extension of the scope of multilateral trade rules and that proposals for new issues are attributed to concerns about "unfair" trade and the WTO is seen as an effective way to frame rules and enforce them.

Against this background, what were the implications for the development process of further extension of the system of multilateral trade rights and obligations to new issues and what were the logical 'frontiers' of the system?

Are many of the concepts behind instruments (like dumping, rules of origin and so on) based on the assumption that production takes place within national frontiers, irrelevant under globalization? Should trade instruments be systematically reviewed to ensure that the future trading system reflects the realities of trade and production?

Since globalization and marginalization can be seen as two sides of the same coin, could something better be done in a future round and pre-empt the debate about the "winners" and "losers" of the Uruguay Round? How could future trade initiatives take account of the likelihood that many countries will be unable to derive benefits, at least in the short run, from future trade liberalization and new disciplines without concerted support of the international community?

Given the debate about the dramatic increase in multilateral obligations of developing countries as a result of the Uruguay Round and their restrictive effect on policy options available to developing countries to emulate the policy mix of successful countries, how could future negotiations maintain momentum to freer trade and greater multilateral discipline, while permitting developing countries to follow different development strategies dictated by their particular situations?

Mali wondered what UNCTAD intended to do to help the weakest countries. Yemen said UNCTAD should identify the sources of inherent bias in the system that work against the developing countries and how these could be dealt with.

The Canadian proposal

Canada suggested a concentration of UNCTAD resources and capacity to help two categories of countries - the LDCs and other poorest countries who can't identify the markets and for whom the multilateral rules are irrelevant, and some middle- and low-income countries, who did not have a stable production base and needed help to adjust. The first group should get 50% of the resources, and the second group another 35%, and the rest of the 15% utilized for a third group of countries, some advanced middle-income countries and some transition economies. The two other groups - the developed and the newly industrializing countries needed no help.

The Conference President, South African Trade Minister Alec Erwin, suggested they should focus on the areas and issues of priority, rather than in trying to divide countries into groups.

The Canadian proposal did not seem to be related to any technical assistance activities and funds, but seemed aimed at both dividing the developing countries into further groups and sub-groups, and reduce or eliminate any institutional capacity to deal with general issues that concern developing countries or the membership as a whole. It seemed to be part of the strategy to reduce and eliminate even the role that was set at Cartagena's UNCTAD-VIII. Canada, like the US and Europe, have made clear their intention to reduce or eliminate any UNCTAD role, even of analysis and discussions and efforts at identifying areas of consensus and those lacking this on the trade and economic issues, and reduce UNCTAD to the role of technical assistance agency for LDCs.

During the post-Brussels phase of the Uruguay Round negotiations, in a private paper circulated to the Quad (Canada, Europe, Japan and the US), Canada had stressed that by creating a multilateral trade organization (which ultimately became the WTO), the UN and its system (including UNCTAD) could be prevented from having any role on these international trade and economic issues.

The Philippines said that any multilateral framework must rest on five principles: necessity, effectiveness, non-discrimination, transparency and least trade-distortive. Sometimes the rules seem to be framed and instruments used to keep trade away from certain countries. Just as they had to be lenient to developing countries in the implementation of rules, they should be strict for the developed countries. There was also the need to ensure that benefits of the multilateral trade system are not taken away by the activities of the private operators on the market. There was need to develop a common ground of competition laws.

Difficulties being faced by the LDCs

Bangladesh said that while the Uruguay Round might have expanded the scope of international trade and widened and deepened the international division of labour, LDCs faced specific difficulties in taking advantage. Also, the reduction of tariffs to increase market access had eroded their preferences and affected their exports. Some of the new disciplines, like TRIPs, will increase the prices for high technology goods and pharmaceuticals.

Egypt said that for globalization to be achieved, the rules and commitments assumed (by the developed countries) in the Uruguay Round should be fully implemented. He referred in this connection to the Marrakesh Ministerial declaration and decisions on help to the LDCs, net food importing countries and so on, and said if the countries were not helped to integrate, the entire credibility of the system will be affected.

Mauritius said that as a country with no natural resources and dependent entirely on trade, as a result of the Uruguay Round they were unable to reap the benefits. The principles of special and differential treatment should be made a part of the system so that these countries would be able to integrate themselves fully into the international trade system and play their role. China said that while the Uruguay Round accords had some positive significance, there were many shortcomings. The industrialized and developing countries had been placed under almost identical conditions of competition in international trade. The developing countries had to take on heavy burdens and the LDCs would be marginalized and would not benefit, at least in the short-term.

While many trade rules had been adopted under the Round, no attention had been paid to the trade-development link. Trade and investment would not automatically solve problems such as poverty.

The preferential margins under the Generalized System of Preferences (GSP) had been eroded. There was need for further liberalization in agriculture, textiles and services where developing countries have an advantage. Anti-dumping and countervailing duty measures have become instruments of new protectionism. Any introduction of environment and labour standards in the WTO would further increase the difficulties.

India said there should be greater liberalization and lowering of the level of protection in agricultural and plantation sectors. The current protection and subsidies (in advanced countries) distorted international trade. There was also need to liberalize sectors where the developing countries had an advantage. The Uruguay Round accords had done little in terms of services sectors to be of advantage to the developing countries nor on movement of skilled and highly skilled natural persons for providing services.

There should be more work at UNCTAD, and technical help and advice, on trade facilitation and on infrastructures like inland transportation.

Uganda said while there was broad agreement about liberalization, disagreement arose over the degree to which countries could participate in them. For the least developed countries like Uganda all these disciplines and new issues were irrelevant since they did not participate at all in globalization and international trade.

Uganda had no desire to remain a least developed country for all time. But what was needed was help and policies to enable them to get out of this status. (SUNS3751)

Chakravarthi Raghavan is the Chief Editor of the South-North Development Monitor (SUNS)from which the above article first appeared.