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Seattle WTO Ministerial ends in failure

The seething discontent of many developing countries at being sidelined from the decision-making process, coupled with unbridgeable differences among the parties, brought about the collapse of the WTO Ministerial Conference at Seattle. With the major powers determined to find 'creative ways' to salvage the Ministerial's work, it is clear they are intent on continuing their secretive and exclusive decision-making practices which ultimately wrecked the Seattle Conference.

by Chakravarthi Raghavan


THE 3rd World Trade Organisation Ministerial meeting ended in a shambles a little before midnight 3 December, with the United States and the WTO Director-General Mike Moore being handed a severe rebuff and the trading system facing the worst failure in its 51-year history.

However, US President Bill Clinton, US Trade Representative and conference chair Charlene Barshefsky and Moore all sought to put a spin on the outcome. They suggested that this was nothing unusual in the context of the GATT/WTO system, recalled some past failed Ministerials such as the 1988 Uruguay Round Montreal mid-term meeting and the 1990 Brussels Ministerial to conclude the Round.

But the Seattle meeting ended in failure:

  • when a number of small economies refused to be manipulated, marginalised and left out of the decision-making processes and acquiesce in decisions cooked up in 'secretive' so-called 'green room' processes;

  • when some of the other major developing countries 'refused' to pay a price to enable the Cairns Group of agricultural exporters and the US to gain concessions from the EC on the agricultural front; and

  • when developing nations refused to be cowed - by some of the street protests and by the US administration - and said 'no' to labour and environmental standards being linked to trade rights and obligations and open to 'sanctions'.

It was clear that the host country and Moore had suffered a severe rebuff at the conference, and this was likely to have some serious repercussions on US politics and the administration's attempts to control and run the WTO trading system to subserve US domestic partisan political processes and ends.

But judging by their responses at final press conferences, neither the US nor Moore nor even the EC (which suffered a spectacular failure in its bid to launch a comprehensive new trade round to write new rules in new areas) seemed aware of what had hit them. The EU Trade Commissioner Pascal Lamy showed some awareness but seemed to be looking for new ways to continue the same old tactics of a few taking decisions and getting the others to accept them.

Room for 'creativity'

Officially, (according to the closing remarks of the Conference Chair, Charlene Barshefsky) the Seattle Ministerial Conference was 'suspended' and proposals on the table 'frozen', for members to take a 'time out', to consult one another and find 'creative means to finish the job.'

And Director-General Moore 'can' consult with delegations and discuss 'creative ways' to bridge 'the remaining areas in which consensus does not yet exist, develop an improved process which is both efficient and fully inclusive,' and prepare the way for successful conclusion of the Ministerial which would then 'resume its work.'

Meanwhile, on 1 January 2000, two mandated negotiations will start - one in agriculture in terms of Article 20 of the Agreement on Agriculture (AoA) for continuing the reform process, and the second under the General Agreement on Trade in Services (GATS) for a further round of trade liberalisation in services sectors.

But the way all this has been 'achieved' - through some ad-libbed remarks of the chair at a final meeting of the Committee of the Whole, and the chair's closing remarks at the final plenary session (copies of which delegations had to get from the media - will create further tensions in Geneva between Moore and the General Council and its membership.

As they departed Seattle, ambassadors of some key developing nations (who had been participants in the 'green room') had only a 'hazy' view of what was conveyed to them at the COW (Conference of the Whole) by Barshefsky, and had no 'texts' of the decisions on the 'suspension' of the Ministerial or the 'freezing' of the texts. Some confessed that they came to know about the final plenary - where Barshefsky read out a closing statement of the conference decisions - only when this writer questioned them about it.

With Moore determined to 'fulfil' his contract and remain in office till end August 2002, the WTO will be unable to go through a normal catharsis of any political system or corporate management (where the CEO would have left, albeit with a 'golden handshake') and try to pick up the pieces and put them together again.

A large number of delegations and many observers, believed that there was 'organisation' and 'planning' behind the chaotic, confused and confusing conference facilities inside, and a large part of the street protests outside (there is much suspicion even about the violence), which created inhuman working conditions, physical and mental, under which the negotiations were conducted.

US media reports indicated that the Clinton White House had given support to a controlled 'street protest' by organised labour and some of the 'environment' groups in order to 'persuade' the conference to accept US 'demands' for labour and environment standards at the WTO, but lost control when other movements of civil society staged their own protests, and delegates refused to yield.

Maybe after a few weeks of 'cooling off', there will be acquiescence to the 'creative ways', but the system will lose what little credibility it has.

Several environment and labour groups 'claimed' victory in the collapse of the Seattle meeting. While the months of work by some development groups of the North and the South, and their lobbying and alerting of various parts of the government, parliaments and the public, did have some role in the final outcome, the conference failed because of the very substantive differences among the major industrialised countries and between them and the many groups of developing countries on both the current remit of the WTO and the many new issues sought to be brought in for new disciplines.

There was also the growing determination of many small and medium developing countries not to be taken for granted, and their insistence on being part of the decision-making process.

The road ahead

No new round was launched, nor was there any agreement on the need for one and its agenda. The only piece of paper that delegates could take back to their capitals was a one-page text 'as delivered' - the closing remarks of Barshefsky.

But even this they got from press releases of the US mission, and that too from journalists, not as an official document from the secretariat.

While the mandated negotiations on agriculture and services will technically start on 1 January 2000, there could well be a long period of 'negotiations' on what to negotiate in agriculture and what the terms in Art. 20 of the AoA mean - and the deadline of 2002 when the so-called 'peace clause' (against disputes in agriculture based on other provisions of the WTO than those in the AoA) expires.

And while there is much talk and claims of a relatively less controversial agenda for the services negotiations, there are many issues still to be addressed and resolved. Among them are one that no one seems willing to face up to, namely, that negotiators still have no proper basis of statistical data on trade in services and directions of trade. All current data are derived from the 'residuals' of the IMF's balance-of-payments data, whose databases on foreign and domestic services use a different methodology from that in GATS.

Anyway, year 2000 is the quadrennial US presidential election year, and until the next President is in the White House in January 2001 and the administration gets organised, there can be no serious negotiations.

Barshefsky confirmed at her subsequent press conference that sometime in the afternoon she had reached a decision that no agreements would be possible, and had consulted the White House, before going to the 'green room' and then the COW for suspending the conference.

The issues before the trade organisation, she acknowledged in her final plenary remarks, were diverse, often complex and novel. Also, the WTO had outgrown the processes appropriate to an earlier time and needed a process 'which had a greater degree of internal transparency and inclusion to accommodate a larger and more diverse membership.'

This was a very difficult combination to manage, she said, and it stretched both the substantive and the procedural capacity of the Ministerial. It was found 'as time passed that divergences of opinion remained that would not be overcome rapidly.'

The final plenary was preceded by a meeting of the COW where Barshefsky spoke. But no text of her statement was made available, either by the US mission, as it normally does, or by the WTO secretariat, not even to the delegations, many of whom had been complaining throughout the week of the inadequacy of the conference facilities for hearing speeches and interpretation in various languages.

'Frozen'

At a press conference after the 'suspension' of the meeting, Barshefsky claimed that 'everything' on the table was 'frozen', implying that various proposals and compromises that had figured in the 'green rooms' and working groups (many of whose chairs' reports were challenged as inaccurate at the COW on 2 December), or texts that the secretariat might have prepared and presented, were there, could not be taken back and could provide a basis for further negotiations.

She pointedly made a reference in this connection to a 'text' on trade and labour standards that had not come out of any of the five working groups of the conference or the 'green room' process.

But the EU Commissioner Lamy seemed to imply at another press conference (after Barshefsky's) that the status of the various compromise proposals and texts at the informal talks and 'green rooms' was governed by the principle 'nothing is agreed until everything is agreed' and hence the said proposals and texts were no longer there, a view that some other trade diplomats seemed to share!

Deep and unbridgeable differences of substance - as between the major industrial blocs and varying coalitions of developing countries - and even sharper differences as between the WTO leadership and major industrialised countries and the large number of developing countries over the decision-making processes and transparency of such processes in a 'rules-based' organisation were primarily responsible for the failure here.

But the ignoring of rules and procedures for declaring a suspension and setting up a process for 'creative ways' does not bode well.

And developing countries may still face the same coercive processes at work in Geneva to force them to accept what the major powers agree among themselves - unless they insist on 'rules'.

This has perhaps been the biggest failure in the 51-year history of the trading system (under the old GATT and the 5-year-old WTO).

Even the 1982 GATT Ministerial (where the US came with demands for a new trade round covering new subjects, and failed to muster support) ended in a declaration and a clear work programme of two years, leading to a difficult preparatory process of two more years and seven years of difficult and complex negotiations to create the WTO and its agreements.

And while the Montreal and Brussels Ministerials of the Uruguay Round failed to agree, they had 'official' texts before them which were transmitted back to Geneva for further work.

In this case, there were over 300 official proposals which were tabled during the Geneva preparatory process at the General Council; an informal Council chairman's text of 19 October for a draft Ministerial Declaration, which is full of square-bracketed texts (indicating absence of agreement) and proposals presented in a confusing way; a 224-page official compilation JOB (99)/Rev 3 (6986) of 18 November; and an informal revised draft Ministerial text whose status was challenged by many delegations.

At Seattle there had been no clear procedural proposal from the chair for the COW and on which a consensus decision could be obtained, but merely a final plenary statement on 3 December night by Barshefsky.

Contributory causes behind the collapse perhaps were:

* the arrogance of power of the host country and its attempts, with some secretariat help, to manipulate the preparatory processes at Geneva and the Ministerial meeting in Seattle itself - including an attempt to use the street protests to get the US view accepted - and the lack of even the normal courtesies and facilities extended by a host to the member nations of the WTO;

(Nothing illustrated this more, perhaps, than the fact that even the normal diplomatic practice of offering 'thanks to the host country' and to the 'chair', moved from the floor, was absent at the final meeting of the COW and at the final open plenary when Barshefsky made her closing remarks and closed the meeting.)

* the ineptness, bordering on incompetence, on the part of the secretariat and its Director-General Moore who even in Geneva had taken over - without a formal General Council decision - the preparatory process to push the US and EC contradictory agendas, and who mistook the shadow for the substance in the 'new dynamics' of the 135-member WTO and tried to win some over by consultancies and jobs, and others by 'humour' and 'jokes'.

Barshefsky's closing remarks got some scattered applause from the delegates (and much cheering from the NGOs and public gallery when she admitted unbridgeable differences), but near-complete silence greeted the remarks of Moore.

So rattled was the secretariat that after having announced the press conference would take place in the same plenary hall, the press office asked everyone to watch for the monitors and quietly passed word to the journalists to go down two floors to a smaller press room. Many newsmen who had not been tipped off found out later and came down only to find themselves excluded. Their protests at being excluded and the protests of those inside on their behalf led to the press conference being shifted again to the plenary hall.

In any corporation, the chief executive officer would have been forced to quit even over the chaotic conditions at the conference - for delegates, ministers, media and others with official business. A journalist suggested as much when he referred to the failure of the conference and asked Moore at his press conference whether he should not resign or plan to quit.

Moore only said he had agreed to a 3-year contract and that he always abided by his contract!

The above article first appeared in the South-North Development Monitor (SUNS- issue no. 4567) of which Chakravarthi Raghavan is the Chief Editor.

 


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