Regional vs Multilateral at WTO General Council

Geneva, 8 Feb (Chakravarthi Raghavan)   The growing number of regional trade arrangements and the problems relating to their compatibility with the multilateral system and the rules and rights and obligations of the World Trade Organization agreements, and the inability of the WTO to come to grips with them was highlighted Thursday in a debate in the General Council.

The European Union, which has a large web of preferential agreements, apart from its own Rome and Maastricht treaty and its processes to expand the EU in Europe, and the United States, which too has a similar range of agreements (and under President Bush, has a priority to conclude the Free Trade Agreement for Americas), have both in effect attempted to prevent a political discussion of the issues at the General Council.

The EU also suggested that these and other systemic issues are best resolved in the wider context (an euphemism for a new round with a comprehensive agenda), and by the Ministerial Conference at Doha, but later, ‘retreated’ slightly - although not in substance.

The subject was brought up for discussion in a communication from Australia, Hong Kong China, India, Japan, Korea, New Zealand and Pakistan, who wanted the General Council to address the situation in the CRTA and provide political impetus and guidance to enable the WTO Committee on Regional Trade Agreements (CRTA) to discharge its responsibilities.

The CRTA, set up (in 1996 by a decision of the General Council, even before the Singapore Ministerial), to look at regional agreements and report on their compatibility with the WTO, has so far been unable to reach any conclusion, or even adopt a report, on even a single RTA referred to it   because of the differences in each case between those who are members of a particular RTA and benefit from the preferential arrangements, and those on the outside, who are  discriminated.

The deadlock in the CRTA and its inability to take a decision inevitably means that the issues will be decided piece-meal by dispute panels and the Appellate Body,   reflecting the predilections of the secretariat, the panellists and the AB members   and increasing trade conflicts.

But underlying these are the basic systemic issues and the applicability of any WTO decision or view to existing agreements or whether existing RTAs and their arrangements, and their incompatibility with the WTO system should in effect be ‘grandfathered’, and thus put beyond challenge, while new RTAs that might be formed would be hit by the new disciplines.

A new attempt to break the logjam in the work of the CRTA, and provide a political impetus to its work, is to be made, through consultations by the incoming and outgoing chairs of the General Council and the chair of the CRTA to be able to report to the Council and enable a discussion of the issues.

The Council had a prolonged discussion on this issue Thursday, with India initiating the discussion and asking the GC to consider the “situation regarding the work of the CRTA” and to provide a political impetus and guidance to the CRTA from the General Council to resolve the difficulties.

In a statement at the GC on behalf of the seven co-sponsors, India said that the CRTA had completed factual examination of 62 RTAs out of 86 referred to it, “but has not been able to conclude examination and adopt any of the reports so far.”

India’s Amb. S. Narayanan  recalled that at the General Council’s annual meeting on 10 December, the CRTA chair, Amb.Edsel Custodio of the Philippines, had highlighted the difficulties being encountered by the CRTA in fulfilling its mandate. The CRTA chair had underlined the need for the GC to provide a political impetus and guidance to enable the committee to discharge its responsibilities, which included an assessment of the consistency of the RTAs with the provisions of the WTO agreements. The secretariat had produced a comprehensive note on the “systemic issues arising from the lack of clarity in rules”. While some rules had been clarified by decisions of panels and the AB, others remained unclarified despite the best efforts of the members.

In the discussions at the GC last December, broad concerns had been expressed about the lack of progress. This situation was not in any member’s interest and “it is necessary and important that the WTO be able to exercise effective monitoring and oversight in this important area of interest:” Efforts to address the systemic issues in the CRTA had made no headway, thus hampering considerably the CRTA’s inability to fulfill its mandate. “We need to find a pragmatic way forward,” the Indian ambassador said.

It had been suggested in December that the CRTA chair should be requested to report back to the GC on the consultations he was holding within the CRTA to find ways for making progress in its work. India, with its co-sponsors, believed it would be important for the GC to keep itself apprised of the progress in the CRTA and support the efforts of its chairman to break the deadlock.

The General Council, India suggested, should invite the chair of the CRTA to report back to the GC at its next regular meeting on the outcome of the consultations he has been holding. This would enable the GC to take stock and consider what further steps would be useful.

Strongly supporting the Indian statement, Hong Kong China said that it would be preferable to deal with the issues in the General Council rather than go to the dispute settlement process. On the suggestion of the EC that the outstanding issues should be discussed in the new round, HKC said they could not wait for a new round and the outcome there. The suggestion that any decisions on the systemic issues should apply only to future agreements, in effect ‘grandfathering’ the existing agreements, was not feasible.

Both Hong Kong China and India said that it was not their intention that the GC should take over the work of the CRTA, but rather that the GC should discharge its oversight role.

Norway argued that any decisions about the systemic issues could not apply to existing RTAs, and the members should “adjust their ambitions,” rather than insisting on 100% compliance of RTAs with the WTO agreements and rules.

The EC suggested that RTAs and bilaterals could continue, provided they conformed to WTO rules. But it would not be possible to reach conclusions at the General Council, and the issue should be considered at the next Ministerial.

The United States professed to share the concerns of members about RTAs, but did not agree with the prescription for the General Council to consider and give guidance. “The agenda of the GC should not be overloaded,” the US added.

The Philippines supported the view that the GC could provide political and substantive inputs to enable the CRTA to complete its work.  However, the Philippines rejected any effort to link the issues to a new round. “We are opposed to any such linkages, and for one thing we have not agreed to a new round.”

Pakistan strongly supported the Indian position, while Australia saw no contradiction between a new round and the General Council having a discussion and providing a political impetus.

In responding to some of the questions raised, India said that the WTO members even at the outset had been so concerned with the problems relating to the RTAs that they did not even wait for the Singapore Ministerial meeting, but took a decision in the General Council establishing the CRTA and asking it to address the issues. Even for a discussion in Doha, there was no certainty of a CRTA report. It was necessary for the General Council to consider the problem and provide a political input and guidance. It was the prerogative of members to suggest a solution in a ‘wider context’, but without some political guidance at the General Council-level, there was no certainty that any annual report from the CRTA could be ready even by the time of the Doha meeting. As for the ‘overloading’ of the GC agenda, India found the agenda overloaded even now but it was the right of any member to bring issues before the GC and India had not objected.

After further discussion, it was agreed that further consultations should be held to examine the possibilities of the CRTA chair making a report to the GC on his consultations, and enabling the GC to consider it. - SUNS4832

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

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