W.T.O. YET TO BRIDGE NORTH-SOUTH DIVIDE
Although eight months have passed since the traumatic failure of the World Trade Organisation’s ministerial meeting in Seattle, there has been little or no progress in narrowing the deep North-South divisions. Developing countries are advocating reforms to the WTO’s rules so that the trade system can meet their needs, but the developed countries have ignored their requests. This is a major problem highlighted at a seminar on the WTO held in Geneva recently.
By Martin Khor
Third World Network Features
It’s been eight months since the Seattle Ministerial Conference of the World Trade Organisation broke up in disarray last December.
Disagreements about the nature and future of the trading system were a major factor for the failure of that meeting.
The developed nations wanted to launch a new round of trade talks and bring more issues under the WTO umbrella. But most developing countries resisted that, wanting instead to have their major trading partners join in to correct the many problems and imbalances in the current WTO agreements and system itself.
Have the lessons of Seattle been learnt? Has the North-South divide narrowed? Will the global trading system be able to right itself and restore the public credibility that it lost in Seattle?
It would appear that the situation today remains ‘pessimistic’ even though the trade diplomats of some developing countries have not yet given up hope.
They are fighting a bold battle to convince the developed countries to agree to resolve the existing problems arising from the Uruguay Round agreements which form the rules of the WTO.
These problems, called by their diplomatic code term ‘implementation issues’, have first to be settled in order to restore the system’s credibility in the developing world.
One of the implementation issues (and a major grouse) is the lack of benefits accruing to developing countries as the promised increased access to rich-country markets have not materialised. In particular, textiles and agricultural products from the South are still blocked by continued high protection in the North.
Another issue is a wide range of problems confronting developing countries that now have to change their domestic policies and laws to conform to the WTO agreements they signed on it. The required changes in agriculture, services, intellectual property laws, subsidies and investment measures are threatening to render local firms and farms uncompetitive and unviable.
Many developing countries have thus been advocating either a longer time period to implement these changes, or to amend the WTO’s rules to take into account their acute problems of implementation.
Although the major trading countries have shown little or no interest in this issue, developing countries have to unite to make clear their demands.
These were among the conclusions arising from a panel discussion on ‘Implementation Issues’ during a seminar on Current Developments in the WTO: Perspective of Developing Countries, organised by the Malaysia-based Third World Network in Geneva on 14-15 September.
The seminar, comprising 11 sessions covering the major issues now before the WTO, provided a forum for developing countries’ diplomats, experts and UN agencies to discuss the South’s views and options in future negotiations.
Egypt’s Permanent Representative to the WTO, Ambassador Fayza Aboulnaga, said that in the run-up to the Seattle Conference last year, the implementation issue was the subject of major division between developing and developed countries.
Developing countries had expected benefits arising from market access in the Uruguay Round, but in reality only very few countries had benefited by only a little bit, and even then some of these few countries had suffered a financial crisis, she said.
A like-minded group of developing countries had placed their concerns on implementation problems in the draft ministerial declaration before Seattle. But the major countries had responded that there could be no solution now as it had to be negotiated in a new round. ‘This would mean that we would have to pay twice,’ said Amb. Aboulnaga (once in the previous round, and another in a new round).
After Seattle the WTO decided to have two special sessions (in June and October) of the General Council to act on the implementation issues.
However, Aboulnaga said at the June session, ‘We felt there was no seriousness on the part of our major trading partners, it was a one-way street, developing countries had to reiterate our positions. But it fell on deaf ears, there was no courtesy on the part of our major partners to even react.’
She said it would be difficult to expect any different attitude in the October special session. The situation though very pessimistic is not hopeless, provided there is solidarity of the developing countries. The major countries are linking action on implementation issues to a next round, whilst developing countries have said we cannot go for a new round unless implementation issues are resolved.
She provided examples of difficulties facing developing countries in implementation, including in the agreements on intellectual property (TRIPs), textiles, and standards.
Munir Ahmad, executive director of the International Textiles and Clothing Bureau, said the developed countries claimed there are no implementation problems but that there was only a legal problem (of countries not complying with their obligations) that can be taken to the WTO’ dispute settlement system to settle.
However, developing countries have a broader perspective. They are asking whether the aims of a particular agreement have been realised and gains forthcoming; and also, on some obligations accepted by developing countries in the Uruguay Round, is there the capacity to absorb the pain?
Munir said that implementation was not just a legal issue but a real problem that developing countries had fought hard to get the WTO to recognise, from the WTO’s first ministerial conference in 1996 in Singapore to the 1998 Geneva conference and in the run-up to Seattle.
He said that in the cases of some agreements to which developing countries are unable to adjust, what is needed is a modification of those agreements.
A senior Zimbabwe diplomat, T T Chifamba, said that developing countries had often been lectured that the trade system was like a bicycle that needed to go forward (with new issues or a new round), otherwise it would fall.
He said that he had heard a good counter to that analogy from an NGO representative at a forum during the Seattle talks: ‘To stop a bicycle from falling, you can put your foot down.’
Chifamba said that putting the foot down was what developing countries were doing when they insisted on redressing the issues arising from implementation problems.
He said it was a wrong start for developed countries to dismiss the genuine concerns of developing countries as unrealistic, or that these issues cannot be discussed outside a new round. ‘For this system to work and for people to have confidence in it, we all should derive benefits,’ he said.
He also criticised the developed countries for trying to take a legalistic approach (such as taking developing countries to the dispute settlement panels to get compliance) as this ignores the genuineness of problems faced by developing countries.
He said the like-minded developing countries group in the WTO had shown flexibility already by not demanding that all problems be resolved immediately, and instead categorising them into those with different datelines. Instead, there had not been flexibility by developed countries in their lack of operationalising of the special and differential treatment.
In terms of willingness for engagement, the attitude of the developed countries had been terrible, to say the least.
S I M Nayyar of the Pakistan Mission said the mechanism of special sessions to deal with implementation had so far not given cause for optimism. There was no willingness of the developed countries to engage in negotiations. Such a response is disappointing and adds to the lack of confidence in the system.
Ambassador Narayanan of India, referring to Aboulnaga’s earlier remarks (that although the situation is pessimistic there is no reason to lose heart), said that most developing countries do not comprehend our own power.
‘If developing countries press ahead, the developed countries cannot ignore our concerns forever,’ he said.
‘The implementation issues have to be looked at politically as well. To ensure that the WTO is seen positively at least a little in our countries, we need to resolve implementation problems. This should be known to the developed countries.’
He agreed with previous speakers that resolution of the implementation issues should not be linked to a new round. Instead, if implementation is not dealt with, many other issues (and not only the question of a round) cannot be taken by developing countries in a serious manner.
He concluded: ‘If developing countries are determined to achieve their objectives on implementation, they can succeed. What is important is for as many developing countries as possible to speak up at the WTO’s special session so that they send out a clear signal.’ - Third World Network Features
About the writer: Martin Khor is Director of the Third World Network.