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North-South
divide at WTO General Council meeting GENEVA: Trade negotiators laid out on 24 September, at the Special Session of the WTO General Council which launched a preparatory process for the next Ministerial meeting, their initial positions on further trade talks at the WTO, and agreed on a schedule of meetings and on a work programme on electronic commerce. The Special Council meeting, which had on its agenda the fixing of the date of the next Ministerial meeting (to be hosted by the US), was unable to do so. Egypt withheld its consensus, as the WTO spokesman put it, to check whether the dates proposed by the US (30 November-3 December 1999) clashed with other meetings, and there will be further consultations. However, other participants said, Egypt took note of the proposed dates, but pointed out that Ministerial meetings are to be held every two years, and hence that the next should be held in 2000. If the dates were aimed at accelerating the process and pushing for comprehensive multilateral trade negotiations as a single undertaking, the General Council has not agreed to it. If it was something else, Egypt would still need to check whether the dates conflict with other international meetings. The WTO press office briefed the media on points made by delegations, and made available copies of statements made by the EC and the US, but not those of other delegations. In initial presentations, the EC and Japan laid out their demands for "comprehensive" talks, including on new issues identified for study at Singapore (investment, competition policy and trade facilitation). Developing countries underlined their priority towards implementation issues and the built-in agenda, and declined to consider or take any decisions on new issues until the working parties mandated at Singapore to study these issues have reported to the General Council at the end of this year, and the General Council can adopt a decision or recommendation on a further course of action. The US itself kept its options open, and did not commit itself either way, but insisted on the negotiations already mandated - on agriculture and the next round of services negotiations - starting on time. The Special Council meeting had been mandated by the 2nd Ministerial meeting to set up a process to identify and make recommendations to the next Ministerial on a work programme of further liberalization, sufficiently broad-based to respond to the interests of all members. A number of countries that spoke on 24 September also supported the idea of the new negotiations being treated as a "single undertaking" - forcing countries to accept or reject the package - and a time frame of 3-4 years for the conclusion of the negotiations after their initiation. India, ASEAN, Egypt for Africa and for itself, and other developing countries referred to a number of accords of the Uruguay Round, where the promised benefits or balance has not accrued to developing countries, and which need to be addressed, in the preparatory process, from the perspective of special and differential treatment. Egypt, for Africa, and several other developing countries also questioned the thesis (of the WTO head, the EC and other industrial countries) that solutions to the problems of developing countries hit by the financial crisis lay in those countries "further liberalizing" access to their own markets. Comprehensive negotiations The EC called for comprehensive negotiations for the new millennium, with an agenda reflecting the interests of all countries. A sectoral focus, as in the case of the information technology agreement, serves the interests of only a few countries and would not work, it argued. The EC set out as "illustrative" its wish list - services; further negotiations on agriculture, as required in Art. 20 of the Agreement, for fundamental reforms and "non-trade concerns"; substantial further reduction of industrial tariffs; "traditional" issues for rule-making, including the Sanitary and Phytosanitary Measures agreement, Technical Barriers to Trade, and new issues like competition policy, comprehensive framework of international investment rules and trade facilitation; trade and environment; government procurement; Trade-Related Aspects of Intellectual Property Righs (TRIPs) to ensure the accord keeps up with new technological developments; electronic commerce; and other additional issues that members might raise as the work programme developed. Australia called for negotiations on issues already mandated, agriculture and services, as also industrial tariffs. It supported a single-undertaking approach to the comprehensive negotiations, but called for an "early harvest" in agriculture. A separate Cairns Goup statement distributed called for an end to the export subsidies and competition in agriculture being indulged in by some of the major trading partners (including the US and the EC). The US said that while several members seemed to have answers for what the preparatory process should recommend to ministers, the US would be unable to do so until it was able to complete over the next several months its consultations with industry and Congress. But they could not afford to take the seven years it took for the Uruguay Round, and ways must be found "to tear down barriers" without waiting for problems on every issue and sector to be resolved. However, the preparatory process must spend adequate time at the beginning to address the important issue of implementation and the launch in time of negotiations already mandated. As for new issues, arising from the Singapore work programme, these have to be carefully considered, and collective consideration could begin only after the end-of-the-year reports from the working groups. The Czech Republic, speaking for the Central European countries, emphasized both implementation and future work (new issues), and supported a comprehensive round of negotiations, including on investment and competition. Japan also supported a "comprehensive series of talks", and mentioned in particular: full and faithful implementation of existing agreements, including obligations undertaken by developing countries on TRIPs, Trade-Related Investment Measures (TRIMs) agreement (which calls for review before five years), a sufficiently broad-based further liberalization process with comprehensive negotiations including on industrial tariffs, investment rules and other new areas in addition to agriculture and services. Korea called for comprehensive negotiations to reflect a balance of interests, including all issues "mature enough" to be negotiated - the built-in agenda, market access for industrial products, investment, competition policy, transparency in government procurement and regional trade accords. Chile supported the view for a three-year time span for the negotiations, and for the inclusion of, apart from agriculture and services, investment issues and, if there was a consensus, competition-policy questions. Priority to implementation issues Brazil stressed the importance of the single-undertaking concept for the negotiations, delineating these from the financial services and telecommunications accords, which had been mandated as part of the Uruguay Round. Agricultural and services issues, part of the built-in agenda, should not be seen as individual sectoral talks. India, in what the WTO spokesman described as a lengthy statement (the text later made available by the delegation showed it was slightly shorter than the EC statement distributed by the WTO press office), provided the details of a number of agreements involving deficiencies and failures to implement the special and differential treatment provisions favouring the developing countries, and needing remedies. Several developing countries that spoke later supported this stand. India insisted that before moving on to other issues identified in the Geneva Ministerial Declaration, the preparatory process should give priority to issues of implementation of existing agreements, and concentrate on the three sub-indents of para 9 of the Declaration. While some aspects of the preparatory process could be delegated to the relevant subsidiary bodies, implementation issues requiring political sensitivity should be addressed at the General Council. Of crucial importance was the element of special and differential treatment (S & D) in the WTO accords - time- limited derogations for longer transition periods and greater flexibility for certain obligations, and others for specific, but undefined, actions by developed countries under certain agreements while dealing with developing countries. On the time-limited derogations, the preparatory process should evaluate the experience of developing countries over past years, and determine whether the intentions of negotiators have been effectively translated into practice. In cases like that of the Textiles and Clothing agreement, there has been implementation in letter, but without achieving meaningful market access for developing countries. The second category of S & D was in the nature of "best endeavour" clauses, and had been virtually ignored in implementation. India cited in this regard the GATT balance-of-payment (BOP) provisions (Art. XVIII:B) enabling quantitative restrictions (QRs) by developing countries for BOP reasons, and which were different from Art. XII provisions (applicable to industrial countries), specifically requiring assessment of adequacy of foreign exchange reserves, taking into account the long-term development needs of a developing country. But in actual practice (with the IMF providing both data and a judgement on adequacy), both Art. XVIII:B and Art. XII were being treated similarly. Similarly, despite the special provisions in Art. 15 of the Anti-Dumping agreement, instead of special consideration being given before taking action, the special consideration had become one of targeting developing countries with repeated proceedings on the same commodity. In the same vein, the special provisions of Art. 10 of the Sanitary and Phytosanitary (SPS) accord and Art. XII of the Technical Barriers to Trade (TBT) agreement have hardly ever been honoured in implementation, leading to the imposition of standards by developed countries beyond the technical competence of developing countries and without regard to their special development, financial and trade needs. Again, such lack of understanding of the problems of developing countries could be seen in the Agreement on Subsidies and Countervailing Duties, which viewed as "non- actionable" subsidies used by the developed countries, but made actionable those usually deployed by developing countries. And while special dispensation was provided for low-income and least developed countries, this was still subject to countervailing measures, thus nullifying the benefits granted. The General Agreement on Trade in Services (GATS), in Art. IV and Art. XIX, called for measures to facilitate participation of developing countries in world trade. But in the implementation of GATS, there has been increasing pressure on developing countries to undertake more and more market access commitments, without adequate trade-offs in market access to them in sectors and modes of supply of interest to them. The Dispute Settlement Understanding too had provisions for special and more favourable treatment to developing countries, but these remained largely as "best endeavour" clauses. The Indian statement said that all these were emphasized lest there be any expectations that developing countries seeking solutions to their legitimate concerns in implementation should pay a price for redressal. The concerns of developing countries were the result of asymmetries and imbalances in the agreements, and the "empty platitudes" of special and differential treatment have to be reviewed to lend substance to them. Issues raised by India "These should be done now, and delinked from any new negotiations, and should not be viewed as part of any new package, but a realistic realignment and balancing of [the] earlier imbalanced package, so as to facilitate meaningful involvement of developing countries in the process mandated at the Geneva Ministerial." On other issues, India highlighted the question of "food security" in relation to the further negotiations on agriculture, and said it would be "too simplistic" to suggest that the agricultural liberalization envisaged would overcome problems of food security for developing countries with sizeable populations. Regimes to curb the trade-distorting subsidies used by some WTO members, if applied rigidly to developing countries that do not distort international trade but provide subsidies to ensure adequate production of food and livelihood for the poor, would cause enormous hardships. Juxtaposed against the unacceptably high levels of subsidies of the major trading partners, any negotiations for further liberalization of international trade in agriculture have to take on board food security concerns of countries like India. Other issues raised by India included: * Unilateral trade sanctions, investigations and trade actions maintained or imposed by some countries under their domestic law, contrary to their WTO obligations; * Regional trading arrangements that were threatening global free trade; * Imbalances and asymmetries in the TRIPs agreement, which provides a high degree of protection to industrial products, but does not recognize the rights of countries of origin in the granting of patents on products using the traditional bio- resources of developing countries, an example being the higher protection under Art. 23 available to wines and spirits of export interest to developed countries, but not products of interest to developing countries; * Transfer of technology at fair and reasonable cost in relation to SPS measures, TBT measures and electronic commerce; Without access to advanced technologies at affordable costs, developing countries would find it difficult to discharge obligations under existing WTO agreements or participate in high-technology-thrust areas proposed to be added to the universe of multilateral trade disciplines. * An "Enabling Clause" for transfer of technology should be introduced into the WTO agenda - in terms of opening an environmental window or asking developing countries to conform to higher health and technical standards; * National regulations on rules of origin threatening market access of developing countries, particularly in textiles; Developing countries were being pressured to liberalize market access in areas of interest to the developed countries, while such liberalization was being delayed in areas of competitive advantage to developing countries - textiles, movement of professional and skilled persons - making it apparent that the balance of concessions promised in the multilateral trading system has not so far been achieved. * Fresh negotiations under the Agreement on Agriculture and GATS should commence after 1.1.2000 as mandated; * Future work in mandated reviews should be continued in the designated committees concerned in accordance with an agreed timetable, and "there is no need to prepone (advance) consideration of these issues or prejudge them at this stage." * The education process in the spheres of investment, competition and transparency in government procurement, as a result of the work programme agreed at Singapore, is continuing and a wider and deeper understanding is necessary before it could be concluded that multilateral negotiations are necessary. * In trade facilitation (also a Singapore programme), simplification of customs documentation and procedures is being handled by the World Customs Organization (WCO) under the Kyoto Convention, and until this is completed, there is no scope or likelihood of any substantial simplification by any country. The WTO must await completion of this work in the WCO. * Environmental concerns were being used as disguised trade barriers and causes for unilateral actions by developed countries to restrict market access. Considerable work has been done in the Committee on Trade and Environment (CTE) and this has highlighted that no commitments in the sphere of trade and environment could be undertaken, despite the initiative of some developed countries, unless developed countries first met their obligations under the Bio-Diversity Convention and the Rio Principles. Until developed countries proved the genuineness of their intentions by engaging in commitments in the area of international environment conventions, no weight could be given to their professed interest in safeguarding the environment through action limited to the trade-environment interface. Premature The initiatives on new issues - new round of industrial tariff reductions, high-level initiative on trade and environment, greater transparency in WTO functioning through greater involvement of "stakeholders" or a comprehensive new round of trade talks - were premature, if they were intended to carry the voluntary participation of developing countries, India insisted. They were still in the process of implementing the Uruguay Round tariff cuts, and these will be completed only in 2000. The results of these reductions have to be assessed before launching negotiations for new commitments. Overloading the WTO agenda would not be productive and it would be premature to talk of any comprehensive new round of negotiations or the induction of non-trade issues such as labour standards on the WTO agenda. The implementation problems and built-in agenda should be addressed first, and trade made an instrument to promote development. The thrust for global free trade would be far more fruitful if the ground realities of the world economy are fully understood and the needs and problems of developing and least developed countries are taken on board. It was also too early to deal with the question of a "single undertaking", since the Council was only in the very early stages of the work programme given by the Geneva Ministerial. Indonesia, on behalf of ASEAN, called for faithful implementation and said the problems they faced in agriculture, textiles and clothing, rules of origin, anti-dumping and subsidies were similar to those expressed by India. The implementation and built-in agenda issues should be given priority. Egypt, speaking for Africa, noted that Africa's trade share had been falling steadily, and this was a matter of serious concern to the region, and ought to be to the world community. There was need for faithful implementation of S & D provisions. Egypt had heard a number of ambitious agenda proposals, but Africa would ask trading partners to have more realistic expectations. On market access, the African statement noted that products of export interest to the developed world, like computers and computer chips, were getting duty-free treatment, but those of export interest to developing countries faced high tariffs and tariff escalation. In a separate statement on its own behalf, Egypt agreed that everyone should resist protectionism, but suggested that there was a need to be "sensitive" when preaching further doses of liberalization as a solution to the plight of those millions suffering from adjustment and financial crises. There were efforts to address labour standards at the WTO, while issues of movement of natural persons for delivery of services were being held up with little progress. Uganda called for the implementation of measures to give effect to the High-Level meeting on LDCs. (Third World Economics No. 194, 1-15 October 1998) Chakravarthi Raghavan is the Chief Editor of the South-North Development Monitor (SUNS)from which the above article first appeared.
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