WTO/UNCTAD LDC meet is now a process

by Chakravarthi Raghavan

GENEVA: The heads of the UN Conference on Trade and Development (UNCTAD) and of the World Trade Organization (WTO), after a joint coordination meeting, along with their senior staff, announced through their spokesmen on 9 July evening that the preparations for the 26-27 October High-level meet on Least Developed Countries (LDCs) was on course.

However, an informal press briefing by WTO's spokesman, Keith Rockwell and UNCTAD spokesman, Andrew Whitley, suggested that the two organizations, and in particular the WTO, were trying to lower expectations, presenting the meeting as the start of a process, and not a one-off affair which could be judged in concrete terms of trade concessions or assistance to the LDCs to create capacity to export.

Special meeting on LDCs

Rockwell could not explain how or why, if the meeting is to be seen as the "start of a process" (and not one whose results could be judged in terms of concrete agreements and decisions on market access, aid and investments for infrastructure and production), it is different from the process that began in 1980 with the UN/UNCTAD High-Level meeting on LDCs in Paris, and its Plan of Action (embracing trade, aid, investments and so on) and the second one, also in Paris, with its renewed commitments and plan of action, so far, without much success in pulling the LDCs out of their plight.

The special meeting on LDCs is being convened as a result of the decision of the Singapore Ministerial Conference of the WTO, where the Ministers agreed to "organize a meeting with UNCTAD and the International Trade Centre (ITC) as soon as possible in 1997, with the participation of aid agencies, multilateral financial institutions and least developed countries to foster an integrated approach to assisting these countries in enhancing their trading opportunities."

In deciding on the joint organization of the meeting with UNCTAD, the Singapore WTO Conference also agreed:

* to the Plan of Action (recommended by the WTO General Council) "for positive measures for example, for duty-free access, on an autonomous basis, aimed at improving their (LDCs) overall capacity to respond to the opportunities offered by the trading system";

* seek to give operational content to the Plan of Action, for example, by enhancing conditions for investment and providing predictable and favourable market access conditions for LDCs' products, to foster the expansion and diversification of their exports to the markets of all developed countries; and in the case of relevant developing countries, in the context of the Global System of Trade Preferences (GSTP).

Though the original intention had been to hold the meeting as early as May or June, and before the European summer, the scheduling became difficult because of the views of some of the participating aid agencies, as well as problems within the WTO secretariat, and a reshuffling of staff to remedy this.

The LDC meeting and preparations, and a joint preparatory meeting in June, got into further trouble because of differing mandates, and practices and rules on participation of the membership and other issues.

As a result, UNCTAD withdrew from joint sponsorship, and only attended as an observer, of a meeting organized by a WTO body, the sub-committee on LDCs of the WTO Committee on Trade and Development.

Some of the problems related to the fact that non- governmental organizations accredited to UNCTAD could participate as observers in its meetings, while the WTO does not allow for this.

But more importantly, the WTO wanted the participation of Taiwan as an observer, and of Hong Kong as a full member. Neither of these two are members of the UN or UNCTAD. Hong Kong's participation did not create much of a problem - China having made clear to UNCTAD that it would have no objection provided it was designated as "Hong Kong, China" (the new agreed nomenclature for Hong Kong as the Special Administrative Region of China).

However, participation of Taiwan (an observer at the WTO, seeking to negotiate membership as a separate entity) proved more difficult - since the UN does not recognize Taiwan as a separate entity, but only as a part of China.

The "format" for the meetings of the Joint Advisory Committee of the UNCTAD/WTO joint body (which would have meant UNCTAD inviting its members and WTO, its members, thus excluding Taiwan) was not acceptable to the WTO.

But with the US reportedly insisting on Taiwan's participation, the preparatory meeting ultimately became one of the WTO (functioning according to its rules and practices), and the UNCTAD as an observer.

At the ECOSOC high-level segment, and the informal session on policy dialogue with heads of agencies, several governments had expressed concerns with the situation and asked for renewed efforts for a jointly organized high-level meeting.

UNCTAD Secretary-General Rubens Ricupero and WTO Director- General Renato Ruggiero met on 9 July to smoothen out problems at levels of the two secretariats, but recognized that others needed decisions by their inter-governmental bodies.

NGO participation

As for NGOs, UNCTAD and WTO secretariats have agreed (with the views developed at the WTO LDC sub-committee meet) that each organization's rules and practices would prevail at meetings convened by them.

The October meeting will be a WTO meeting (thus run according to its rules and practices). This means that NGOs can participate "according to the 'Singapore formulae' of the WTO" - they can sit and listen to speeches in the plenary, but not participate or speak.

UNCTAD will hold a September symposium, to which will be invited NGOs accredited to it and the business sector - with some thematic round tables and six or seven individual country round tables, and its outcome will be fed into the October meeting.

Each LDC has been provided with a "check-list" and asked to undertake its own preparations and investigations of its needs and constraints, and come up to the September/October meetings with a "wish list".

And NGOs, public interest and business, are being asked to help LDCs to prepare themselves for this.

Perhaps, the NGOs as part of the "wish list" might put together past "requests" put forward individually and collectively in the preparations to and since the first UN Conference on LDCs in Paris till now and what has happened, and what was given in terms of trade and aid with the left hand and taken away with the right.

At a meeting convened at short notice by UNCTAD (in June) to "brief" its NGOs þ about half a dozen NGO local representatives were present - several of the participants expressed their concern that instead of the UN's more transparent practices spreading into the WTO, the WTO's practices were spreading into UNCTAD.

At the Singapore WTO Conference, the one outcome of the "Singapore formula" for NGO participation was that NGOs from the North and the South saw at first hand that the WTO was not only non-transparent in its decision-making and functioning from civil society, but that its processes were non- transparent even to the majority of its membership, and that its decision-making though ostensibly on the basis of equality of every member, in fact, was by a secret oligarchy - run by, for and in the interests of the majors.

NGO representatives at the UNCTAD briefing session warned that following the Singapore formula, the UNCTAD-WTO LDC meet would have a similar result, and that it would add to the negative view of the current norms and patterns of globalization and use of the trading system for this purpose, as also the negative perceptions about the effects of the WTO system for the poorer countries that is now prevalent among development and environmental NGOs - of the North and the South.

UNCTAD officials, involved in the substantive preparatory work, privately say that they could either withdraw from the effort to influence the outcome for the benefit of the LDCs, or make the best out of a bad situation.

The WTO focus on the problems of LDCs has come after an initial period - when the secretariat and its officials went around questioning the view about the "winners and losers" in the Uruguay Round, and offering the panacea of liberalization and deregulation of trade and services, particularly the basic telecom and financial services markets of developing countries.

Later, at the 1996 G-7 summit at Lyon, Ruggiero tried to promote the idea of binding zero-tariffs in the industrialized markets for exports of the LDCs - suggesting that this would bring investments into these countries and they would be able to develop.

For one thing, the major industrial countries were not ready to accept this, and the WTO LDC plan of action, depending on autonomous decisions for preferential market access concessions, was adopted.

The original UNCTAD concept of the GSP (Generalized System of Preferences) was of a generalized (that is, available to all developing countries) and non-reciprocal zero-duty preferential market access.

The idea was that the industrialized countries would allow such duty free access, thus providing preferential access vis- a-vis imports from other industrialized countries, and enable developing country-exporters to "compete" with domestic producers. It was intended as a kind of foreign aid in the form of trade benefits (and thus won't need budget appropriations) - and came with the concept of "burden sharing" or all Industrialized Countries (ICs) providing same or similar benefits.

"Burden sharing" among developing countries

But in the process of granting GSP, the industrialized countries ensured that their domestic producers - in the areas of agriculture, labour-intensive products like textiles and clothing and footwear and so on - did not have to compete against the cheaper imports from the developing world.

Even in extending GSP to LDCs, a similar outlook prevails.

The current practice is not for grant of preferences to enable the developing countries or LDCs to compete on an equal footing with domestic producers (who don't pay tariffs or face non-tariff barriers or anti-dumping investigations), but provide preferences to one group of exporters from the South against others - and thus a "burden sharing" among developing countries.

It has thus become a case of "robbing Paul to pay Peter" - the preferences come at the expense of other developing countries, and not even of the industrialized countries and their exporters.

The staff director of the US House Ways and Means Sub- committee on Trade, Thelma Askey, in an interview published in the USIA's "Economic Perspectives" (June 1997) has said that freeing trade in textiles and clothing (as promised in the WTO by 2005) would make it impossible for the US to grant "unilateral trade preferences" to the Caribbean countries through preferential textiles and clothing quotas. As for extending the GSP, with each extension, it's becoming harder to find money in the US budget to fund the revenue loss caused by the GSP special tariff preferences.

Rockwell and Whitley said the two secretariats would jointly produce a document about the problems of tariff escalation and high tariffs faced by LDC exporters.

When Rockwell was asked at the informal briefing, whether the WTO expected the US and the EC to come up at the October meeting with their market access concessions, he referred newsmen to the two missions.

But lest LDCs or NGOs and media might begin to look at and scrutinise the concessions that might be on products that the LDCs can now export, but find obstacles, they are already being directed to the "possibilities" for LDCs to now "leap frog" and get "information" and diversify through the Internet and other electronic wizardry.

Newt Gingrich, in one of his first pronouncements as the Speaker of the House of Representatives and pushing his "Contract with America" was confronted by the problems of the inner cities and the minority black community and its poverty. He then spoke of providing every household with a lap-top computer and access to the information networks. But nothing much was heard about it later, though it now surfaces in international organizations about high-tech, easy-to-access computer data bases and so on.

LDCs, and the poor in the Third World, might be forgiven if to them all this sounds like the words of the French queen (who literally lost her head later) who said if they don't have bread, why can't they eat cakes. (TWE 166, 1-15 August 1997)

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