Don’t expand trade system to new issues, advises Ricupero

Jakarta, 29 May  (TWN) --  New trade negotiations should not repeat the mistakes of the Uruguay Round and should not further limit  the space of developing countries for policy options but should focus on real trade issues of concern to developing countries, especially the implementation problems.

Therefore, Members of the World Trade Organization should not try to expand the frontiers of  the trade system to new and controversial issues but instead go back to the basics of what the WTO was set up to do, namely, to provide trade opportunities to developing countries.

This was the central message of UNCTAD Secretary-General Rubens Ricupero in an address at the opening session of the meeting of the Trade and Economy Ministers of the Group of 15 (the Summit-level Group of Developing Countries) held on Sunday.

Other speakers in the panel were WTO deputy director-general, Mr.  Miguel Rodriguez Mendoza (who said the issue was no longer whether Doha would initiate new negotiations but what subjects to include in the agenda) and Third World Network director Martin Khor (who for his part argued that introducing new issues at Doha would mean  asking developing countries to pay twice, thrice or four times in return for considering their requests on implementation.)

The UNCTAD Secretary-General, who was Brazil’s ambassador and negotiator during the Uruguay Round,  stressed that there should not be a repetition of the Uruguay Round, which had imposed deeper and wider obligations on developing countries.

Ricupero said that developing countries should come up with clear ideas on what they wish to see on the agenda of negotiations, as the decision on whether or not to accept an issue on the agenda is already a key part of the negotiations as it would shape the results.

Referring to his own experience as a negotiator in the Uruguay Round, Ricupero suggested that developing countries  concentrate on trade negotiations that address matters of real concern to developing countries. “We should adapt the level of ambition of trade negotiations to what is feasible,” he said. “When you discuss whether to accept or not accept negotiations on an issue, it is already an important negotiation."

“What to accept on the agenda is a key decision.  To agree to accept something on the agenda is already part of the negotiations and decisions...It is clear that the way you accept what is on the agenda when launching negotiations itself determines what outcome is reached.”

In that context, Ricupero advised developing countries to focus WTO’s work on trade liberalisation issues, and  “not try to expand the frontiers of the trade system to new and controversial issues, but go back to the basics of what the WTO is set up to do, and that is, to provide opportunities to developing countries for trade.”

Earlier, Ricupero warned that in the present WTO negotiations, there should not be a repetition or continuation of the Uruguay Round, as the Round had been very ambitious (with 15 working groups) and it had also left a series of problems that had not been adequately addressed yet.

“A continuation or repetition of the Uruguay Round is not desirable especially since deeper and wider obligations were imposed on developing countries and it has been the cause of problems burdening the system, for example the implementation problems in agreements such as TRIMS, TRIPS and subsidies.

“Developing countries don’t wish to have the setting up of wider and deeper obligations that restrict their options for development policies.  This is by no means an imaginary concern.  Several developing countries have been brought to the dispute settlement system because of the conflict between their industrial and development policy on the one hand and the results of the Uruguay Round on the other.”

Ricupero said that an important parameter to adhere to, was that “if we wish to have new trade negotiations, it is not to repeat or continue the Uruguay Round but to try to redress the imbalances in the agreements and cover what has not been completed by the Uruguay Round.”

He recalled that at the 1986 launching of the Uruguay Round in Punta del Este,  developing countries had insisted that there should be the completion of the unfinished business of the Tokyo Round of concern to developing countries, including agriculture and textiles.

But today, six years after the Uruguay Round ended, “much of that unfinished business is still unfinished.”

Although decisions were made in principle to liberalise agriculture in developed countries, in reality very little has happened. In textiles, decisions were implemented in letter but not in spirit and very little true liberalisation has happened until now.

“New trade negotiations should not limit further the space of developing countries for policy options,” said Ricupero.  They should concentrate on real trade issues of concern to developing countries, and paras 21 and 22 of the draft Seattle declaration provide much of the materials for discussing the implementation issues.

Ricupero remarked that despite several months of intense discussions on implementation, so far no meaningful results had been achieved. “If we right now can have concrete signs that part of the implementation issues are seriously addressed, this could provide proof of goodwill.

“It is not correct to argue that any meaningful progress in implementation can only take place in a comprehensive and enlarged Round,” added Ricupero.

“This is not true even in the WTO’s practice. After the Uruguay Round, at least on three occasions, liberalisation took place outside a Round -- the Information Technology Agreement, and successful conclusions on basic telecommunications and financial services. All these three took place entirely outside of any link to a comprehensive Round, and they were mainly promoted by the developed countries. Thus the argument that nothing can be achieved outside a comprehensive negotiations cannot be supported by evidence.”

Ricupero also recalled that when the WTO was formed, it had been stated that the establishment of the WTO would make unnecessary the launch of new negotiations.

He added that there should also be discussion on measures to ensure the avoidance of a situation that developing countries have to negotiate under duress.

The WTO deputy director general, Miguel Mendoza said the WTO had achieved a lot to restore confidence after Seattle, including launching of agriculture and services negotiations, addressing developing countries’ implementation concerns and more transparent and inclusive functioning of the WTO.

He added that the hard work in the WTO was not enough as the issues were complex and interrelated.   It was hard to believe that developing countries’ implementation concerns could be dealt with properly without addressing wider concerns of other WTO members, Mr. Mendoza argued. The same, he said,  could be said of agriculture and services.  More substantial reform could be best achieved in a wider negotiating exercise as concessions would depend on cross-linkages and trade-offs.

He said an overwhelming number of WTO members wanted to make progress on electronic commerce, industrial tariffs, transparency in government procurement and trade facilitation. Others were interested in investment, competition and environment.  Many wanted to revise anti-dumping and subsidy rules.

Mendoza said the issue did not seem to be whether to initiate new negotiations at Doha but rather which subjects to include in the negotiating agenda. He added that developing countries were actively influencing the negotiating agenda and that they are convinced that only through trade negotiations can they open the markets of developed countries and other developing countries.

Third World Network director Martin Khor stressed that developing countries were being asked to pay not twice but three or four times for having their implementation issues considered.

On arguments from developed countries and the WTO secretariat that developing countries would gain most from a New Round, Khor said “nothing could be further from the truth.”

He added the WTO was at a crossroads and decisions before and at Doha will affect the direction of the system.

“The most important decision is whether the next few years will see the WTO Members rectifying the problems and imbalances in the rules and system, or whether the proposal for  a ‘new comprehensive Round’ is accepted, in which case more new issues are added to the WTO which will distort the trading system and add on even more to the existing imbalances.”

Khor said the developed countries have not lived up to their liberalisation commitments, “yet they proclaim that it is unquestionably beneficial for developing countries to liberalise as fast as possible.”

Developing countries are asked to bear for a little while the pain of rapid adjustment which is surely good for them after a few years, whereas the developed countries which advocate this policy themselves ask for more time to adjust in agriculture and textiles which have been protected for so many decades.

Implementing their WTO obligations have caused so many problems for developing countries, and raised the serious issue whether developing countries can presently or in future pursue development strategies - including industrialisation, technology upgrading, development of local industries, food security and maintenance of local farms and agriculture, and fulfilment of health and medicinal needs.

Unfortunately the developed countries have so far not responded positively to the developing countries’ implementation requests.  Their attitude seems to be that the developing countries entered into legally binding commitments and must abide by them however painful; and any changes require new concessions on their part.

“Such an attitude does not augur well for the WTO, for it implies that the state of imbalance will have to remain, and if developing countries ‘pay twice’ or ‘pay thee or four times’, the imbalances will become worse and the burden more intolerable.

The proposals for a new comprehensive round to be launched in Doha, if accepted, would be equivalent to making developing countries pay twice, thrice or four times.  The heart of the proposed “comprehensive” New Round is the introduction for negotiations for new agreements in investment, competition and transparency in government procurement and other issues.

It is claimed by the proponents that such a New Round would be especially beneficial to developing countries. Nothing could be further from the truth.  Developing countries are told their requests on implementation and on getting greater access in the North for agriculture and textiles will be considered in the New Round, meaning that they have to accept the entrance of the new issues into the WTO.

But new agreements and obligations in these new areas would be very detrimental to developing countries, which will find even more of their development options closed off;  and at the same time (given the poor record of the North in not keeping their commitments) there is no guarantee at all that the implementation problems will be resolved or that there will be really more meaningful access to Northern markets in agriculture, textiles and other sectors.

The WTO and its predecessor the GATT have evolved trade principles (such as non-discrimination, MFN and national treatment) that were derived in the context of trade in goods.

It is by no means assured or agreed that the application of the same principles to areas outside of trade would lead to positive outcomes.  Indeed, the incorporation of non-trade issues into the WTO system could distort the work of the WTO itself and the multilateral trading system.

Therefore, a fundamental rethinking of the mandate and scope of the WTO is required, said Khor.

Firstly, issues that are not trade issues should not be introduced in the WTO as subjects for rules.  This rule should apply at least until the question of the appropriateness and criteria of proposed issues is dealt with satisfactorily in a systemic manner.

Secondly, a review should be made of the issues that are currently in the WTO to determine whether the WTO is the appropriate venue for them.  Prominent trade economists such as Jagdish Bhagwati and Prof.  Sreenivasan have concluded that it was a mistake to have incorporated intellectual property as an issue in the Uruguay Round and in the WTO.

There should be a serious consideration, starting with the mandated review process, of transferring the TRIPS Agreement from the WTO to a more suitable forum, Khor said. –SUNS4905

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

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