Global coherence must involve UN agencies

The factors that led to the inability to forge a consensus at Seattle must be analyzed so that corrective steps can be taken, the UNCTAD Secretary-General said in a foreword to an UNCTAD publication, “Positive Agenda and Future Trade Negotiations.”

by Chakravarthi Raghavan

Geneva, 11 Sep 2000 -- The factors that led to the inability to forge a consensus at Seattle must be analyzed so that corrective steps can be taken, says UNCTAD Secretary-General Rubens Ricupero in a foreword to an UNCTAD publication (UNCTAD/ITCD/TSB/10), “Positive Agenda and Future Trade Negotiations.”

The publication is a compilation of technical papers prepared by UNCTAD staff members and consultants in relation to the support given to developing countries for the preparation of a “positive agenda” of developing countries for the Seattle meeting. The UNCTAD technical cooperation project was coordinated by Mr. Murray Gibbs, head of the Trade Analysis and Systemic Issues Branch.

Besides a foreword by Mr. Ricupero and an overview on the elements of a positive agenda by Mr. Gibbs, the publication contains a number of technical papers (prepared before Seattle) covering various issues including special and differential treatment, tariff peaks and tariff escalation, negotiations on agriculture, services, Agreement on Textiles and Clothing, review of TRIPS, TRIMs, subsidies, Anti-Dumping and Countervailing Duties, Sanitary and Phytosanitary agreement, Rules of Origin, and ‘other issues’ like Trade and Environment, Competition, Technology Transfer and E-Commerce.

In his foreword, Mr. Ricupero (a former Brazilian permanent representative to the GATT and UN) says that when he attended the Singapore Ministerial, he was struck by the extent to which the WTO had evolved beyond GATT, and in particular by the new and intensified challenge and opportunities facing the developing countries in the multilateral trading system. “The scope of multilateral obligations, the technical complexity and the sheer volume of the issues covered, the extraordinary work load on Geneva-based delegations and the administrative burden on capitals have placed most developing countries in a situation where participation in the system, let alone attempting to shape its future course, is almost beyond their means,” he says.

“The Seattle Conference,” Ricupero notes, “did not launch a new round of multilateral trade negotiations, and did not achieve a clear consensus as to the appropriate follow-up. This poses a serious challenge not only to the WTO, but also to the international trading community as a whole, in which UNCTAD plays a particular role, that of ensuring the continuing strength and integrity of the multilateral trading system and its relevance for all countries."

“The factors which led to the inability to forge a consensus at Seattle must be analyzed so that corrective steps can be taken. UNCTAD has a contribution to make in this respect. One issue is that of coherence in global economic policy making, which must be seen in a broad perspective, involving the various agencies of the UN that deal with social, environmental and cultural matters. UNCTAD’s particular role is to contribute to coherence between trade and development.”

In an overview of the Positive Agenda, Mr. Murray Gibbs says that while street protestors at Seattle had only the vaguest idea about the WTO, but viewed the conference as an opportunity to express concerns and frustrations over the impact of globalization and their sense of anxiety over the growing impotence of individuals even under fully democratic regimes, a large number of NGOs came to Seattle with well-documented briefs on the impact of WTO rules and decisions on various aspects of environment, health, small farmers, child workers etc.

“These issues are unlikely to go away in the foreseeable future. It is evident these issues are all part of the broader issue of coherence in global economic policy. The relevant decisions at Marrakesh is narrow and places coherence exclusively in the context of cooperation between the WTO and ‘the international organizations responsible for monetary and financial matters.’ Subsequent experience has shown that other organizations in the UN system, such as the ILO, WHO, UNEP, UNESCO are equally relevant to global coherence.”

Earlier, Gibbs suggests that while many factors contributed to the failure of the Seattle Conference,  some lessons have been learnt.

Firstly, substance cannot take a back seat to process. If major trading countries cannot agree among themselves on major issues such as agriculture, services or anti-dumping, no amount of procedural manoeuvring will create such agreement.

Secondly, it is no longer possible to assume that agreements can be negotiated among a small group of countries, in a non-transparent manner, and imposed on the majority of WTO members.  The WTO head, Director-General Moore was aware of this change in mentality, and attempted to open up the negotiating process by creating a set of open-ended negotiating groups. But with the initial negotiating text so unsatisfactory, it proved impossible for these groups to move rapidly towards agreed text, and under pressure of time constraints, ministers rapidly fell back into the habit of the old GATT, says Gibbs. This was clearly articulated in the strong statements circulated at Seattle by the Latin American and Caribbean and African groups, to the effect that they would not be able to join a consensus or agreements in whose negotiations they were not fully involved.

[This skirts the issue of under what authority, in a rules-based WTO, the Director-General could even create such groups, or add on at the last moment a new group to deal with labour or other issues, as he did at Seattle, and whether it was not merely a case of ministers falling into the old habits of the GATT, but of the head of the secretariat too following the same course.]

Adds Mr. Gibbs: “Under the WTO all countries have accepted roughly the same level of obligation and will be bound by the outcome of any negotiation. Developing countries have become ‘full stakeholders’ in the system, and thus cannot be marginalised from the decision-making process.”

The overview identifies some of the issues that remain unresolved, and highlights the Special and Differential Treatment (S&D) issue as one such. “While there is merit in hypothesis that ultimately all countries should be subject to the same obligations, it is also logical that they benefit from such differential treatment in their favour, so long as it is required, not simply for an arbitrary transitional period.”

Referring in this context to the market access for least developed countries, the overview notes that the LDCs largely receive duty-free treatment under existing preferential regimes, “and it is the concept of ‘bound’ (duty-free treatment) that is crucial. If duty-free treatment does not have the crucial contractual status that would permit the LDCs to have resort to dispute settlement mechanisms if such bindings were breached, it would be of little additional value. Binding would not require an amendment of the WTO agreement: a protocol could easily be devised to provide de facto binding status to such commitments.”

On the issue of transfer of technology, the overview notes that this issue has permeated discussions on various issues in the run-up to Seattle. The Uruguay Round agreements, particularly through the GATS and TRIPS, have set up a legal framework that made it easier for enterprises possessing advanced technologies to take advantage of such technologies to expand their operations on a global scale. This was obviously necessary for the multilateral trading system to keep up with realities, and maintain its relevance.

“On the other hand, the majority of WTO members do not possess, nor have access to such technologies, and they consider that the system should equally serve their interests as well. This imbalance in the rights and obligations between the technologically weak and the technologically strong had provoked initiatives to introduce corrective measures notably in the context of the built-in agendas of TRIPS and GATS.”

On a new round of multilateral trade negotiations (MTNS), the postive agenda overview notes that in the run-up to Seattle, many WTO members had expressed support for launching a new round of MTNS at Seattle, and the failure of Seattle had not fundamentally altered the perceptions of these countries on the need for such a Round. In this perception, a round “with a broad-based and balanced agenda to conclude within a 3-year time-frame” continues to be an objective of a number of developed and developing countries. The main argument has been the need to maintain the momentum of trade liberalisation against protectionist pressures which risked becoming stronger around the world, as well as to provide possibility for trade-offs. Among the major trading nations, the EU has been the main proponent of a major “millennium round”, while the US has been hindered from taking a major initiative because of the failure of the President to win fast-track authority.

On the other hand, some developing countries have considered that the WTO should concentrate on full implementation of the Uruguay Round agreements and the built-in agenda which foresaw new negotiations in agriculture and trade in services and reviews of several multilateral trade agreements (MTAs). These countries have indicated that there is no consensus on structuring the future WTO work programme as “another round”. Other matters of priority for developing countries include the implementation of S&D treatment as envisaged in various WTO agreements, including on subsidies and countervailing measures, anti-dumping, TRIPS and TRIMs which have major implications for development policies.

Referring to the idea of a “single undertaking”, which it views as having growing support, the overview says that some of the nervousness of developing countries with the ‘single undertaking’ results from their experience of the final stages of the Uruguay Round, “where they were faced with a take-it-or-leave-it situation.” In a box on the single-undertaking, the overview adds that the unique nature of the UR single undertaking was that “it was imposed by fiat.”

“Faced with the impossibility of amending the GATT to incorporate all the MTAs, the developed countries had decided to withdraw from the GATT (termed GATT 1947) and establish a new legal framework, supported by a new organization i.e. the WTO. Developing countries thus had little choice but to accept the ‘single undertaking’, even though it included some agreements, e.g. TRIPS, that they would never have accepted had they had the choice.”

However, at least in retrospect, it is doubtful whether in fact the developed countries would have been able really to walk away from the GATT 1947. They were the biggest beneficiaries of GATT 1947, and became bigger beneficiaries of the WTO and its MTAs. If even a few of the major developing countries had been prepared to stand up, things might have been different.

In any event, the overview ignores the fact that the negative impact of the “single undertaking” have been compounded by the way the dispute settlement system—the secretariat-run panels and Appellate Body— have interpreted the ‘single undertaking’ concept (that all signatories must sign on to all the agreements) to give a totally distorted interpretation of ‘cumulative obligation’ of all the agreements, with the panel and Appellate Body using the negative consensus aspect of the binding nature of their rulings to legislate and extend obligations through interpretations, almost always to the detriment of developing countries, and raising questions about the legitimacy of the WTO and its dispute settlement process.

“In the Uruguay Round,” adds the overview chapter on the single-undertaking issue, “the concern of developing countries was to ensure that certain key issues were not excluded. In the future round, their main concern may be to ensure that certain issues are not included.  Thus, the approach to the question of single undertaking would seem to depend upon what is finally included within the scope of negotiations. -SUNS4737

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

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