North keeps its options open on WTO agenda

Apart from pushing the issue of electronic commerce on to the agenda of the WTO, the US appears to have adopted a strategy of keeping all its future options open.

by Chakravarthi Raghavan

THE 2nd Ministerial Conference of the World Trade Organisation ended on 20 May with two declarations that did not exclude anything from the future agenda of the WTO.

The Ministerial Declaration set out a broad preparatory process, with perhaps a hierarchy of issues to be addressed by the process to be set up by the General Council at a special session in September, with recommendations for actions by the 3rd Ministerial Conference to be held in the United States in the third or fourth quarter of 1999.

A second declaration, a non-binding one, set up a work programme on another new issue ('all trade-related aspects of electronic commerce') and a broad political commitment by members not to levy any 'customs duty' on trade by electronic transmission.

This second work programme, and recommendations flowing therefrom, along with the standstill on new customs taxes, is to last until the WTO General Council undertakes a review and makes its recommendations by consensus to the next Ministerial Conference.

The e-commerce declaration, which, in its original form, would have resulted in the 'no-customs-tax- for-now' accord continuing indefinitely (unless reversed by consensus) had to be modified by the US in intricate consultations with a small group of countries, to provide wording to the effect that the continuance of the standstill would need a consensus.

But even those who negotiated the wording conceded in private that this was no guarantee that when the General Council makes a report next year, including on this 'no-customs-duty' standstill, denial of a consensus would be any easier.

A WTO official explained that the declaration on electronic commerce and standstill on customs duties was non-binding, in that the WTO dispute settlement system could not be invoked to enforce the 'zero-duty', and that perhaps only the International Court of Justice could.

But the US has not accepted the ICJ's arbitration provisions, and so that route would not be open to it. However, a political commitment is more weighty than a rule-commitment, he said.

On the declaration which outlined the preparatory process, according to participants, it was clear from the exchanges between the US, the EC and several others at the working session of the Ministerial, that the US was keeping open all its options - sectoral negotiations (on agriculture and on services), broad-based negotiations on these and other questions, and/or talks on all of these, subject to what has supposedly been agreed to already at private meetings of the Quad countries (Canada, the EC, Japan and the US).

No waiting for others

According to some press reports after such a meeting in April, it had been agreed among the Quad that while broad-based negotiations would be launched, as soon as agreements are reached on two sectors or issues, they would be clinched and brought into force, without waiting for others.

With the United States administration at the moment not having any fast-track negotiating authority from Congress, or even an understanding with Congress on the broad negotiating objectives, it can only move on the basis of various other authorities it has.

And while Congress might grant such authority, the chances seem to be less and less likely, at least until the Presidential (and Congressional) elections of year 2000, with a new President in the White House.

This means the US can only conclude accords in areas where changes in US law and Congressional action would not be needed or when its trading partners are willing to negotiate (and allow Congress to change the accords) or renegotiate later on the basis of Congressional views.

Thus, even the agriculture negotiations (and not preparations for negotiations, as US Trade Representative Charlene Barshefsky stressed at a news briefing later) which the US wants to begin in 1999, as set out in the Marrakesh agreements, would have some limitations.

Any accord where the others make some concessions but require the US also, in return, make some concessions that would entail changes to US law (including domestic or other support that Congress has now decreed by law), would put the negotiating partners at a disadvantage - since Congress may not accept it.

While the Ministerial Declaration for a preparatory process, requires that process to make recommendations on 'the issues, including those brought forward by Members, relating to implementation of existing agreements and decisions,' the US remarks at the press briefing after the meeting left little doubt that the US would not easily agree to any changes in the rules or accords to deal with the problem.

As Barshefsky put it, the WTO is a contractual institution. 'We make commitments, others make commitments, we implement, they implement. There is dispute settlement if a party fails to do what it committed.'

Her public remarks, and those of US officials at the informal process that led to the drafting of the declaration and elsewhere, left little room for doubt that even the textiles and clothing accord, of which developing countries were critical as there was 'integration without any meaningful trade liberalisation', would see no change until 2005, by which date other forms of trade barriers could be in place.

In fact, the preparations for and launching of negotiations on agriculture and in services, which the US insists should begin respectively in 1999 and 2000 with the new accords concluded quickly (rather than wait for everything to be concluded, as in the Uruguay Round, or take seven years), may result in more trade gains for the US, and the same state of affairs for the South.

As experienced former trade negotiator of India, Mr. Bhagirath Lal Das, has put it in a communication to the South-North Development Monitor (SUNS), the agreed text means that 'the stiff resistance' of some delegations has softened the initial stance of the EC (for a millennium round with new issues), 'but the net outcome is quite clear.'

'There is an entry of the new round through the "broad-based" coverage, plan and structure of modalities for further liberalisation and the stipulation of a time-frame,' Das said.

'If anyone among the developing countries thinks that they have successfully averted a new Round, the situation is similar to what some among them thought in 1986 when the Punta del Este Declaration had kept Services effectively outside GATT and the intellectual property rights (IPR) issue was limited to 'trade-related issues'.

'Developing countries had thought then that they had won their point. I hope that developing countries now do not repeat that delusion,' Das said. 'They should know that a comprehensive negotiation is now on, and instead of pretending that it does not exist, they should rather burn the midnight oil to prepare their own proposals, at least 15 substantive proposals by a group of at least 15 countries. It may sound unrealistic, considering past history, but it is still possible.'

The text of the declaration was 'negotiated' at an informal heads of delegation to the General Council process chaired by the WTO head, Renato Ruggiero over the last several weeks, with the final drive in the last week before the Ministerial.

Too 'dangerous'

The WTO secretariat had at one stage thought that the declaration may still have some unresolved issues, needing Ministerial negotiations. To provide for that contingency, an afternoon Ministerial session had been provided for on 20 May, and the final concluding session had been originally planned for the late evening.

But the trade negotiators at Geneva, ambassadors and some senior officials from the capitals, decided that it might be too 'dangerous' to leave things to ministers, and negotiated and reached a compromise the net effect which was to leave everything to a preparatory process at the General Council starting in September.

This resulted in the final Ministerial meeting taking place earlier than scheduled - so much so that many outside journalists who had planned on the basis of a late evening session, turned up at the UN Palais des Nations complex to find everything was over.

At a TWN-organised seminar for developing countries in April, the United Nations Conference on Trade and Development (UNCTAD) Secretary-General had suggested that ministers are often more subject to pressures than officials.

A similar view had been expressed by many trade negotiators in 1982, after that year's GATT Ministerial meeting (when officials had to struggle hard to claw back concessions made by their ministers without understanding the earlier process), that GATT is too serious a business to be left to ministers.

After this year's meeting, some Third World trade observers have begun to say that the WTO may now be too serious a business to be left to trade ministry officials from the capitals.

At meetings at the WTO, and in their environs, several of the capital- level Third World officials could be heard explaining that the Geneva meeting is a 'transition' meeting. But it was not clear what they had in mind, or what they thought the WTO was 'transiting' from and to what.

There has also been much talk over the last few months about developing countries needing a 'pro-active' agenda rather than a 'reactive one'.

And the UNCTAD Secretary-General has been also stressing this, and trying to help the developing nations to think carefully and formulate such an agenda. But even this process, and its outcome, does not appear to have 'trickled-down' to all the developing countries.

The fault does not lie with UNCTAD, but with the way the developing countries and their institutions and activists are organised, with many of the diplomats having to deal with too many issues in too many organisations.

And while developing countries have managed to ensure that the problems of implementation, and other negotiations or reviews spelt out in the WTO (besides agriculture and services) also figure in the work programme and recommendations for the next Ministerial, they have to articulate these and put forward their problems and recommendations clearly, trade observers said.

Left to the majors, and the secretariat, whatever the problems individual countries may face (and they are yet to piece them together), the official line would be these are 'commitments' that have to be implemented and, at best, some country-by-country and agreement-by-agreement waivers for time could be sought.

Only developing countries can articulate and bring about changes, and this they can do only by saying 'no' to other propositions. And unlike the situation at the time of the inception of the WTO at Marrekesh, their own public have become aware and are not willing to accept the explanations of their governments about being 'isolated' or decisions having been taken by others and forced on them. (Third World Resurgence No. 95, July 1998)

Chakravarthi Raghavan is the Chief Editor of the South-North Development Monitor (SUNS).