Implementation package is “a glass without water”

by Chakravarthi Raghavan

Geneva, 15 Dec 2000 -- The General Council of the World Trade Organization adopted Friday a decision on implementation issues that the Chair itself said was ‘modest’, but which many developing nations described variously as “extremely disappointing”, a ‘glass without water’, and an outcome with ‘non-existent results’.

The very skimpy results in the draft decision that had been subject of informal General Council consideration in three meetings on 14-15 Dec became skimpier in the final version adopted, with the elimination of any reference to the General Agreement on Trade in Services and Mode 4 for supply of services (see "Skimpy package" article from SUNS 4805).

There were in fact only two operational decisions: one relating to Honduras, which was a six-year belated attempt to rectify an error of the secretariat in preparing the Marrakesh documents in having left out mention of Honduras in the list of Annex VII(b) countries, and the other on further work on implementation issues.

In the Honduras case, that country had negotiated its accession to GATT during the Uruguay Round and joined end 1993 or early 1994, and went to Marrakesh where it signed the agreement. The fact of the omission of Honduras name from the list of countries with a per capita below $1000, entitling it to be included in the list of Annex VII(b) was discovered by that country when the WTO came into being, but its efforts to get it rectified all this time proved unavailing.

The Further Work on implementation, in para 7 of the decision said:

“The General Council decision of 3 May on Implementation-Related Issues is reaffirmed. The General Council shall address outstanding implementation-related issues and concerns, including those set out in paragraphs 21 and 22 of the revised Draft Ministerial Text dated 19 October 1999 (Job899)/5868/Rev.1) as well as any other implementation-related issues raised by Members, as envisaged in the Decision of 3 May and the work programme agreed on 22 June 2000, with a view to completing the process no later than the Fourth Session of the Ministerial Conference.”

Developing country diplomats talking outside said that save for the long-overdue rectification of an error relating to Honduras, this last para of the decision, ensuring the continuance of the implementation issues on the WTO agenda, was the only outcome for them. But even this would move forward only when the developing countries continue the process and keep up the pressures in the New Year, and not allow themselves to be fooled that a new round would solve these issues.

Some industrialized countries, who had unsuccessfully attempted through the Chairman’s statement to link the future work on implementation to a “wider work programme ... with a broad and balanced agenda overall” but had to agree to this being dropped, came back to the issue Friday.

The United States said that the process of dealing with the implementation issues next year should not be a burden on the principal work of the General Council next year, namely preparing for the 4th Ministerial and that many of the new would need new negotiations.  Poland (speaking for the central, east European and some Balkans, all seeking accession to the EU, and thus following EU-acquis) said the launching a new round should not be made hostage to implementation.

Pakistan from the opposite side of the debate said it was very important not to link implementation issues to wider negotiations since this could have “negative synergies” that have a “chilling effect on the rest of the organization.”

And India, which with Pakistan and other members of the Like-Minded Group has been a major force in bringing the implementation issue to the top of the WTO agenda, said the results were at best “a minimal first step”, and in countries like India the implementation issue and how it was resolved would alone build confidence in the WTO and enhance its image.

The Chairman of the General Council, Amb. Kare Bryn of Norway, in another context at the GC Friday, had said he estimated he had spent some 800 hours this year on the various formal and informal consultations on this issue.

Many developing country delegates thanked him and said outside the that Bryn had made sincere attempts, but nevertheless the outcome has to be judged in terms of its operational benefits for developing countries and whether the inequities and asymmetries of the past would be redressed even partially.

A frank assessment must lead to ‘an emphatic NO’ as the answer.

Far from building confidence in the system, developing countries are ending the year of confidence-building exercise, with even less to show than when they began the year - with the General Council decision to start a confidence-building measures.

Even the only operational feature of the decision Friday, namely, for continuing the work on the implementation issues and completing the process before the next Ministerial Conference (in 2001) may well get submerged in the preparations for the 4th Ministerial Conference, or tying solutions to the new Round, unless the developing countries who have forced the majors to deal with the issue, persist in the New Year and not allow the WTO leadership and the major trading nations and their ‘allies’ in the South to sweep these issues off the table.

And judged by past experience, the latter is a distinct possibility: developing countries have no institutional memory, and their many intergovernmental bodies and think-tanks, depending on the North for finance, have not been very successful either. And with a new crop of trade diplomats who would replace the current ones, the issues may well be relegated to the background as in the past.

Only domestic businesses and industry in major developing countries, as well as their civil society groups, have become aware and the history of the Uruguay Round and Marrakesh accord cannot be replicated.

In introducing his draft decision for adoption, Bryn outlined the various stages of the consultation processes, including the referring some of the issues to the relevant WTO bodies. From the reports of these bodies, he said, work on the issues referred to them would continue, but the GC retained the overall responsibility: the results of the work referred to subsidiary bodies must come back to the GC.

The draft decision, he stressed, was the outcome of consultations conducted by the DG and himself, and the informal discussions at the GC. The result of the work “although modest” is important in that “it is a clear indication of the collective will to take decisions on implementation-related issues and concerns, and also to continue to find solutions in this area.”

Earlier, the Uruguayan diplomat, Mr. William Ehlers, speaking on behalf of the Uruguayan ambassador, Perez del Castillo (chairman of the Council on Trade in Goods) dealing with the transition period extension issues of TRIMs noted that he had already presented to the GC “elements of an approach” to take account of various positions on the issue. And while it had attracted considerable support, the question remained whether it would be possible to reach agreement based on the elements in all nine cases where extension of time had been requested.

[In at least one case, that of the Philippines, the US has chosen to invoke the dispute settlement process.]

Several countries took the floor to make comments after the decision was adopted.

Colombia, speaking on behalf of the countries who have sought extension of the transition period for the TRIMS (made on behalf of the countries that have sought an extension) stressed the importance they attached to progress on the issue in the CTG and hoped one would be reached early in the new Year.

Brazil’s Celso Amorim said he did not want to place a value on the document, after the Chair had done so viewing it as “modest”. Even if the GC had not decided anything, it had treated the issue seriously.  From Brazil’s point of view, the results were “almost non-existent.”

In a reference to the preambular paragraph about development of internationally agreed disciplines (in the area of Agriculture) on export credits, credit guarantees or insurance programmes (as provided in Article 10.2 of the Agriculture Agreement), Amorim also objected to the idea that rules on these and other issues could be created in international organizations outside the WTO and imposed on WTO members.

Art. 10.2 envisages the WTO members undertaking this work, but this has been stalled by the US and others, pending the outcome of their own negotiations on the same issue at the OECD.

As a result, the issue has not been resolved in terms of the ‘implementation issues’.

The United States said that the continuance of the process on implementation (at the General Council) next year should not become a burden on the Council in its main work of preparing for the 4th Ministerial. Some of the ‘implementation’ issues would require new negotiations. The US did not believe continuing the present process would be to any advantage and advised other members to take a “realistic approach”.

Poland speaking on behalf of a number of east and central European countries suggested that many of the issues under implementation could be resolved only in the context of broader negotiations (a view that the EC has been pushing). Implementation should not overwhelm the work programme, and a future round should not be held hostage to implementation.

Egypt’s Amb. Fayza Aboulnaga said the outcome was “extremely disappointing”. It did not help convey a sense of confidence. She referred to the failure to address the issue of the negative effects of the Agriculture Reform on the Least Developed and Net Food-importing countries (as decided at Marrakesh). Even the very small reference to the Mode 4 (movement of natural persons) for supply of services had been deleted from the text. The decisions taken was at best “an interim decision.”

[In the 13 December draft, now eliminated by US opposition, said:

“Members shall take steps so that administrative practices do not impede the full and effective implementation of their commitments under the General Agreement on Trade in Services (GATS), particularly as regards the supply of services under Mode 4 as provided in Article 1.2 (d) of the GATS.]

Uganda’s Amb. Nathan Irumba said the text was “extremely modest”, and things of importance to Uganda such as the Technical Barriers to Trade and the Sanitary and Phytosanitary Agreements had not been touched. Nor was there any mention of the steps under Art. 66.2 of the TRIPs agreement providing for measures to be taken by industrial countries for transfer of technology by their corporations. Uganda also complained about the deletion of the references to GATS and Mode 4.

Pakistan’s Amb. Munir Akram underlined that of all the trade-related issues for developing countries, ‘Implementation’ was the most important issue on the agenda of the General council. Progress on the issue was supposed to build confidence after seattle. While he appreciated the patience and efforts of Chairman Bryn, it was clear that most of the concerns of the developing countries had not been addressed and the results were modest indeed. After all the hours spent only nine of the 55 indents in para 21 of the Mchumo text had been dealt with. In responding to the usual comments about half-empty or half-full glass, Akram said the ‘glass had no water’. There was nothing on textiles and mode IV under GATS. But the para 7 on future work was important. In Pakistan’s view it was important not to link implementation to wider negotiations. To do so would create negative synergies and this would have a chilling effect on the rest of the organization, he warned.

India’s Amb. S.Narayanan expressed his appreciation of the Chair’s efforts, but expressed his country’s “profound disappointment”.

The major delegations themselves had characterised them as “modest and meagre”. For India, he said, it was “less than modest or meagre; it is below our lowest expectations.”

In the Chair’s draft of 29 November (for consultations), he had incorporated possible decisions on 28 tirets (indents) of the 54 in para 21. The draft of 13 December had contained possible decisions on nine. And while the draft of 14 Dec contained possible decisions on nine, there was a quantitative rather than qualitative equality. The indent on Services in the 13 Dec draft had been eliminated, and made good (quantitatively) by including another one in subsidies, in the nature of a referral to the Subsidies Committee.

Of the 54 items in para 21, the decision covered nine, and of these five merely were referrals to subsidiary bodies and two ‘appeals’ to other international organizations. There were only two meaningful decisions - one of rectification of an error in Honduras case, and another on the tariff quota regime in Agriculture.

Qualitatively, the fact there had been no decisions in Textiles, Anti-Dumping and Subsidies “spoke eloquently” for the real impact of these decisions in terms of trade or economics for developing countries.

It was also regrettable that the Services, that had figured in the 13 December draft, was not included. During the informal consultations (a reference to closed green-room type consultations that Bryn had held) everyone had agreed to a simple decision on Mode 4, movement of natural persons, and India went along with the draft suggested by Bryn and had even agreed to a further dilution. This now did not even find a place and this was extremely disappointing.

The results achieved, Narayanan added, was at best “the first minimal step”.

India had always maintained that the issues raised under ‘Implementation’ required a certain amount of ‘political sensitivity’ and could not be dealt with in a ‘narrow and legal straitjacket’. This was why India had been reluctant to refer these issues to subordinate bodies, but in a spirit of compromise and in deference to Bryn’s wishes, India had agreed to refer some issues to subsidiary bodies.

Since then, said Narayanan, he had read the reports of the subsidiary bodies. Having gone through those on TRIPs and Customs Valuation, for example, India was disappointed at the lack of substantive results on progress,

In the TRIPS Council for example, it had not even been possible to grant observership to the secretariat of the Convention on Bio-Diversity (the US has been opposed), much less conduct a serious examination of the relationship between TRIPS and the CBD on the basis of a Chairman’s check list on a factual note of the secretariat. And for the Customs Committee, India had sent an expert all the way from Delhi to participate in the meeting. But despite clarifications provided, India had not been able to persuade that Committee to accept “even a simple proposal on exchange of information on export values in doubtful cases, with a view to reducing the scope for fraud.”

Narayanan added: “... our earlier scepticism about referring matters to subsidiary bodies has been vindicated. We note again, in accordance with the 3 May decision, we should refer matters, only where absolutely necessary, to the subsidiary bodies with a clear mandate and within a specific timeframe.”

Referring to what he called a ‘minor issue’, Narayanan said that even in matters as a ‘best endeavour clause’ or a desirable course of action, already in various agreements, “any move to making it meaningful was being resisted by some delegations on the ground it would require changes in domestic laws.”

“It is a matter of serious concern,” he added, “that the best endeavour clauses in existing agreements do not figure in the domestic legislation of some of our major trading partners. Even if it is a best endeavour clause, we think it is important that this be clearly provided for in legislation, if not already provided for. This would be in line with the letter and spirit of the WTO agreements...”

The exercise on Implementation-related issues and concerns was, and should continue to be about confidence-building. This could be achieved only through a combination of political will and good faith.

The results achieved demonstrated that these factors were not available to the extent needed. Some delegations had said the fault lay in the process. “We could not disagree more strongly,” the Indian envoy said.

The General council had decided on 22 June that this meeting (on 15 Dec) would decide on the organization of future work in this in 2001.  It was a matter of regret that this Special session had not been able to devote attention to this and decide about the organization of work on the implementation-related issues and concerns to be carried out next year. India hoped that the chair through informal consultations could decide on this well in advance of the next General Council meeting set for 8 February 2001.

India hoped that in the new Year, delegations would find the necessary political will, god faith and courage to address the remaining Implementation issues and find meaningful solutions well before the deadline for the 4th Ministerial Conference. “This alone will build confidence in the WTO and enhance the image of the WTO in countries such as mine. On our part, we shall continue to persevere in our efforts to persuade major trading partners to be more forthcoming and demonstrate greater political will to find meaningful solutions to the outstanding implementation-related issues and concerns.”This will be the most important common endeavour for all the delegations in the year ahead,” Narayanan said.-SUNS4806

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

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