South countries must strengthen common ground in negotiations

by Tetteh Hormeku

14 March 2000, Geneva - Developing countries must identify and build upon the common elements in their proposals for the current negotiations on agriculture and services, as well as on the implementation issues, Mr. B.L. Das, trade expert and former Indian Ambassador to the GATT.

During the TWN Seminar on Current Developments in the WTO: Perspective of Developing Countries, held at the Palais des Nations today, Mr. Das noted that preparatory negotiations this year are crucial because they concern the adoption of modalities and guidelines for the negotiations.  These will shape the outcome of the negotiations when they begin in earnest next year.

In this regard, developing countries must be guided by three main tasks.  In the first place, they must scrutinize proposals of developed countries, in order to identify the threats posed by such proposals to the developing-country interests.

Secondly, developing countries must identify common elements in their proposals and use these commonalities to build their negotiating strengths.

Finally, they must identify and accommodate the concerns of specific countries within the developing-country group, so as to maximize the harmony of their positions and enhance their united front in their negotiations.

Applying these to the main areas of negotiations in the built-in agenda, Mr. Das said that in agriculture, the main problems in proposals put forward by developed countries is their attempt to justify the continued provision of domestic support and export subsidies.

The common opposition of developing countries to this constitutes one common element in their own negotiating positions.  Developing countries should as a whole demand the elimination of export subsidies and domestic support measures currently provided by the developed countries.  This demand can be taken up immediately by all developing countries.

Another common element in the area of agriculture relates to the right and ability of developing countries to employ special safeguard mechanisms in relation to their own producers.  This must extend to even those who have not applied tarrification at the end of the Uruguay Round.

A final common element is the food security concerns of developing countries, as well as support for small producers and rural farmers in developing countries.

In addition to the above common concerns, developed countries must also respond to the specific problems of particular developing countries.  These concerns include those of the  small economies, and NFIDCs, and countries which want to move away from dependence on a limited range of products.

Emphasizing the importance of  these observations, Mrs. Maria Alberto-Chau Huu, from the Philippines, added that the first of current negotiations in agriculture will be concluded by end of March.  Thereafter, the negotiations will be concerned with the translation of proposals into negotiating objectives.  Mrs. Alberto-Chau Huu noted that developing-country proposals centre around three pillars.  These include balance in the negotiations and their outcomes; concerns for developing countries with regard to special and differential treatment, particularly of food security, small producers and non-trade concerns; and the restoration of equity between those who can provide domestic support and those which cannot afford to.

Proposals from the developed countries challenge all these concerns of developing countries, especially the right to special and differential treatment. There is the need therefore for a commonality of approach by developing countries in order to resist the attempts by developed countries to weaken leverages that developing countries have in the negotiations.

A similar set of challenges arise for developing countries in the services negotiations.  Outlining the interests of developing countries in this area, Mr. Das noted that the key common elements include:

1.   the concern that there must be  no dilution of the current GATS architecture;

2.   the need for Articles 4 and 19 to be operationalised for developing countries;

3.   the right of developing countries not to give any more concessions, nor should developed countries ask for such concessions; and

4.   the need for concessions from developed countries to be on the basis of the priority areas identified by the developing countries themselves.

Elaborating on these, Mr. Mohan Kumar, Counsellor at the India Mission in Geneva, who was speaking in his personal capacity, explained the joint paper put forward by some 74 developing countries (the Group of 24, the African Group and the Caricom) on negotiating guidelines, including their insistence that the “existing GATS architecture” should not be disturbed but preserved.

For the developing countries, ‘preserving the existing architecture’, meant:

1.   The ‘positive list/bottoms-up’ approach, namely commitments and obligations under GATS will be limited to those sectors and sub-sectors which countries have agreed to schedule in their country-schedules;

2.   The scheduling of the market access in a country-schedule is subject to the conditions and limitations to the most-favoured-nation and national treatment set out in the country-schedule;

3.   The national treatment obligation is only in areas where commitments are taken by countries in the schedules;

4.   Progressive liberalization;

5.   Market access on request-and-offer basis; and

6.   Flexibility for individual developing countries (Art XIX:2) “for opening fewer sectors, liberalizing fewer types of transactions, progressively expending market access in line with their development situations and, when making access to their markets available to foreign service suppliers, attaching to such access conditions aimed at achieving the objectives in Art IV (increasing participation of developing countries in services trade).

The developed countries through negotiating guidelines and modalities were undercutting this by demanding that there must be no a priori exclusion of any mode or sector from consideration in the services negotiations, thus chipping away  the positive list approach, Mr. Mohan Kumar explained. The developed countries were also seeking the introduction of the concept of ‘meaningful liberalization’, as opposed to progressive liberalization.

They also argue that the request-offer approach was not enough and that it should be  supplemented by other formula approaches, including the “cluster approach”, which will then open up more sectors for liberalization. Under the ‘cluster approach’, if a country had agreed to provide market-opening in a particular sector or sub- sector of a service, the other sub-sectors in the ‘cluster’, which the foreign service supplier views as a barrier or obstacle to market access, or where the foreign supplier is in effect packaging a number of separate services, such as in waste disposal or clean water or energy, would have to be opened up. The US has, for example, explained that bulk-mailing and package delivery service (by Federal Express or anyone else) would involve customs clearance, and thus trade facilitation etc, and all of which would be covered.

Other issues raised by the developed countries, and posing problems for the developing countries,  include the ‘technical review’ of the GATS articles, the writing in of ‘pro-competitive safeguards’, the negotiations on MFN restrictions. Another tactic being applied by the developed countries is the identification of some sectors as “win-win” sectors - where liberalization automatically benefits both developing countries and operators from developed countries.  The sectors being mentioned in this regard are environmental services, telecoms and infrastructural sectors.

Developed countries were also attempting to limit the right of countries to impose conditions on national treatment in granting market access.  These countries have listed these conditions applied by developing countries as obstacles/barriers which must be removed.

In terms of the challenges facing the developing countries in the services negotiations, there was a need to identify the sectors of interest to the developing countries, and also in relation to mode 4 (movement of natural persons) for delivery of services; the assessment of the benefits and costs and losses in trade in services and adjusting the negotiations in the light of the assessment. A second issue relates to autonomous liberalisation that developing countries had already undertaken and how to ‘get credit’ for it in the GATS. Both as a response to this, and separately, developing countries are under pressure to ‘bind’ in the GATS whatever ‘trade’ in services they had already liberalised.

A fundamental issue now coming to the fore was in relation to Art I:3 (b)  of the GATS, which says that ‘services supplied in exercise of governmental authority’ are excluded from the purview of the GATS, but then says in Art I.3.c that a service supplied in exercise of governmental authority means “any service which is supplied neither on a commercial basis nor in competition with one or more service suppliers”.  The question facing developing countries was that in many of them, governments supply some  services and also permit the private sector to supply the same services - - in the fields of education, health, water supply, sanitation etc. And some times governments levy ‘user fees’. Did it mean that these will come under GATS and countries could be asked to open up for foreign competition?

The chairman of the session, Mr. Chakravarthi Raghavan said that in several developing countries, the World Bank and the IMF were forcing governments to charge ‘user’ fees to reflect the costs, and in other cases to privatise such services by ‘selling’ them to foreign buyers.  Developing countries  should not listen to the siren songs of the secretariat or of the foreign services suppliers (who have not hidden their desire to enter and supply such services) nor allow these matters to be settled in the future via the dispute settlement processes, of panels or Appellate body, guided by the secretariat.

A number of areas were identified for action to strengthen the negotiating position of developing countries.  First, developing countries must identify sectors and modes of interest to them, and which require action and commitment from advanced countries.  Related to this, is the need for developing countries to identify the obstacles existing in developed countries which impede developing countries.  This need not be limited to only those sectors and modes of interest to developing countries.

The second area concerned the need to operationalise articles IV and XIX for the benefit of developing countries.

On the question of  autonomous liberalization,   developing countries were advised to resist pressure from developed countries to bind autonomous liberalisation within the GATS framework. As explained by Mr. Das, when developing countries liberalize any sector autonomously, they do so on the basis of their own determined needs.  By the same token, they were entitled to change their minds later and impose restrictions.  This right would be taken away if they bind their autonomous liberalization within GATS.

Several participants noted that the services negotiations have been linked with the agriculture negotiations, and the wider negotiations in a new round being pushed by EC, Japan among others. On agriculture, the EC and Japan were happy with the status quo, and with several others from Europe, were insisting that the agricultural talks agenda should be only in terms of Art.20 of the Agriculture Agreement.

Apart from agriculture and services, the seminar also dealt with the area of implementation problems identified by developing countries. In this context, the main danger posed by the developed-country proposal is the attempt to link the implementation issues to the new issues and to the demand for a New Round.

Participants in the seminar agreed that such a linkage is both unjustified and dangerous for the interests of developing countries.

Explaining why the linkage is not justified, Mr. Tarek Adel, from Egypt, who spoke in his personal capacity, in introducing the subject, said that the question of implementation as covered in the declaration of the Geneva Ministerial Conference makes clear that these are issues to be addressed separately. There is no inference anywhere in the declaration for a linkage between these and a round of negotiations.

Furthermore, implementation issues are already covered as autonomous issues in the draft texts for the third ministerial conference and should be treated as such.

In this context, Mr. Das also addressed certain arguments adduced for this linkage, among them the idea that the implementation issues require amendments to existing agreements and therefore do require new negotiations.  He said not all the implementation issues mentioned require amendment.  Even if they do, there are provisions and procedures in WTO rules for the amendment to be carried out, and these do not demand a round of negotiations.

Mr. Das explained further that implementation issues are essentially about the imbalances against developing countries arising out of the Uruguay Round Agreements.  To link the correction of these problems to a new round will lead to the impossible conclusion of calling for a new round each time a problem is identified with the existing agreements.

He explained further that the idea that developing countries must give something to developed countries in exchange for the implementation issues to be addressed, is a “mis-application of the idea of reciprocity.”  This is because even though WTO negotiations are based on principle of reciprocity, in this particular case, the issue is about unfair results of existing agreements. To link the solution for this unfair result to new negotiations would be an unfair bargain which would lead to even further imbalances.

The main challenge for developing countries is to ensure that there is progress in dealing with implementation issues before the 4th Ministerial Conference.  At the same time, however, developing countries should not allow themselves to be diverted by the resistance of the developed countries to dealing with these issues before the ministerial conference.

Developing countries have got their demands on the table and they have a right to insist that these are addressed.  They should, therefore, not give up, whatever happens.  On the contrary, they should continue to pursue the implementation issues before, during, or after the ministerial conference.  They have as much right to do this as the developed countries, who have always applied the tactics of bringing back their issues time after time, whatever the immediate outcome.-SUNS4857

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