Need to revisit WTO Agreements and rectify imbalances

by Martin Khor

Geneva , 17 Sept 2000 -- Developing countries are now a major factor in deciding WTO issues, but they have to coordinate better and speak up more effectively in order to overcome the present imbalances and inequities, and the stresses and economic dislocation generated by the WTO’s multilateral trading system.

The WTO and its Multilateral Trade Agreements (MTAs) are yet to deliver benefits to developing countries, and the Uruguay Round agreements should be revisited and rectified.  Members should not allow themselves to be diverted from this most important task by attempts to introduce new issues or a new Round.

These were some of the major themes emerging from a Panel Discussion on current WTO issues, involving Ambassadors of four developing countries, during the seminar on 'Current Developments in the WTO' organised by the Third World Network on 14-15 September in Geneva.

Malaysia’s Ambassador M. Supperamaniam said the Seattle Ministerial Conference proved that the developing countries’ interest is now a major factor deciding the WTO’s future course of action.

“Rather than accept a fait accompli, negotiating issues initiated by others, as in the past, developing countries are now pushing forth their own agenda. This is a vital development in the history of multilateral trade negotiations which should be accepted as being in everybody’s interest.”

Amb. Supperamaniam said that any future negotiations, if they are to take place, must be underpinned by seven principles:

*        Imbalances created by earlier Agreements have to be rectified;

*        Developing countries’ interests have to be enhanced through better market access for their goods and services.

*        Current rules and future rules, if any, must not impose burdensome requirements on developing countries. They have to take into account the market and economic realities of the day.

*        Special and Differential (S&D) treatment has to go beyond longer time frames needed to implement the agreements.

*        The concept of reciprocity cannot be applied when asymmetries continue to exist between the developed and developing countries.

*        Liberalisation should not create economic upheavals.

*        Autonomous liberalisation undertaken by developing countries must be given credit.

Supperamaniam added that negotiations are already underway in agriculture and services. “Additionally, developing countries are keen to have the imbalances inherent in some of the Uruguay Round agreements addressed before any new initiatives can take shape."

“All these subjects are very substantive in nature and the WTO membership should give its undivided attention to them, rather than be distracted by calls for a future comprehensive round which does not merit a lot of support at this time.”

On the agriculture negotiations, Supperamaniam said the developed countries’ export subsidies deprive developing countries from access to third markets, and their domestic subsidies and stringent market access conditions make it hard for developing countries to sell agricultural products in the developed countries.

Hence the main objective is to redress the situation to ensure a level playing field where developing countries can fully use their comparative advantage. Moreover, recognition must be given that the agriculture sector in developing countries is not as advanced and thus support they provide for developmental purposes has its raison d’etre.

As to services, some developing countries find a major hindrance in the developed countries’ lack of commitment to open their markets to supply of services by Mode 4 (movement of natural persons), whilst other developing countries are further hampered by the lack of export interest due to their lower level of development in services.

“Under such circumstances, the services negotiations have to ensure that developing countries’ export interests are given due attention and that developing countries shall not be required to make commitments beyond what their markets can bear.”

Supperamaniam added that the imbalances in the Uruguay Round agreements are well documented. The Agreements have to be revisited with a view to addressing market access impediments to developing countries resulting from the application of certain Agreements.

“Further, there has to be the acceptance that developmental aspects go far beyond longer time frames to implement the Agreements. When the Agreements do not assist developing countries to develop further, there is a lacuna that has to be addressed in an effective way.”

Finally, S&D treatment has to be up front on the agenda of current and future negotiations. Ideas on this concept will have to be geared to evolving ways in which globalisation can be managed to benefit developing countries.

Later, answering a question, Supperamaniam said if only developing countries can be more united and speak with one voice, “we can achieve a great deal.” At present, this was not happening. Some delegations share the views of those who speak, but they do not voice their views.  If more developing countries speak their mind and work together, they can achieve a lot, he said.

The Permanent Representative of Mauritius, Amb. Durmahdass Baichoo, who is also the current chairman of the Africa Group in the WTO, said that although Africa was the region with the largest number of WTO Members (41 African countries are members and another five are in the accession process), it remained marginalised with less than 2 percent of world trade.

The continuing erosion of erstwhile preferential regimes that had given them a competitive advantage has heightened the precariousness of African countries.

Also, capacity constraints do not permit Africa to take off, resulting in perpetuating its poor economic and social conditions.

Amb. Baichoo said that Africa has consistently, and with one voice, spoken up on the “towering burdens of meeting WTO obligations, including implementation of WTO rules and provisions, notifications, reviews, and coping with existing transition periods.”

He added, “not only have the various provisions for building capacity through special and differential treatment remained theoretical, but the measures for technology transfer, and modernisation of developing countries through technical assistance, have also all remained inoperative.”

African countries now realise that instead of the expected faster opening up of markets to their products, more barriers have cropped up by way of non-trade measures taken through recourse to the Agreements on Sanitary and Phytosanitary (SPS) Measures, Technical Barriers to Trade (TBT), Anti-Dumping and Countervailing Duties, and Subsidies and Countervailing Measures, by those very same partners who were supposed to facilitate the trade of African and other developing countries.

Other measures like the maintenance of tariff peaks and escalation have worked to check the growth of Africa’s agro-industrial sector and light industries.

Although the participation of African countries in world trade was supposed to increase and they were supposed to be “mainstreamed” into the multilateral trading system, the results today are strongly disappointing, “with exclusion being the lot of many of them and further exclusion being the prospect for yet many more.”

Adding to their existing vulnerability are new problems such as difficulties to survive in a liberalised environment where the playing field is not equal and there has been erosion of preferences for their major traditional agricultural products.

Amb. Baichoo added that on issues of procedure, there is also room to be dissatisfied with the process. “It is known that the WTO has suffered due to lack of transparency in its decision-making process.  Much has already been said about it and about the Green Room process."

“But not much seems to have been done so far and one is led to believe that this has not been put to complete rest. Africa’s position on this is clear. This was strongly and unambiguously articulated in Seattle.”

Amb. Baichoo also said Africa has advocated that conditions of accession should not be more burdensome, and no new conditions should be imposed. “Africa is concerned that the accession process has turned out to be not only tedious but also costly and cumbersome.”

He added that the dispute settlement system posed another set of concerns, as African countries do not have the financial clout and legal resources to test the system, and thus find the DSB procedures costly, burdensome and difficult to access.

Jamaica’s Permanent Representative to the WTO, Amb. Ransford Smith, referred to the agriculture negotiations and the normative behaviour of the WTO.

He said developing countries would not be able to move beyond marginalisation in the agricultural sector if they cannot remove the marginalisation that exists in the WTO’s decision-making processes.  Therefore, it was important for developing countries to press for greater transparency and participation in the WTO.

On the subject of the rules and disciplines of the WTO, Amb. Smith said that when the WTO was referred to as a rules-based organisation, it was also inferred that it was a value-free organisation.

However, he said, the reality was that the rules of the WTO reflected certain interests.

He expressed concern about the failure to operationalise the S&D treatment for developing countries, and warned that if there was a new Round it would create new obligations for developing countries and introduce new issues.

India’s Ambassador Narayanan said that currently the most important issue was implementation, and “it is our expectation that the developed countries will appreciate the seriousness of the situation and that they will meaningfully respond in a way that satisfies developing countries.”

Another major issue before the WTO was the functioning of the dispute settlement system, added Narayanan. “In my view the future, and credibility, of the WTO system and the interest of developing countries in the system depends on whether the dispute settlement system can satisfy the developing countries and benefit them.”

He added it was the responsibility of developing countries to bring these issues before the Dispute Settlement Body. Ultimately their concerns have to be articulated in the DSB and the General Council.

Another issue was the pressures for a New Round. “We are concerned,” said Narayanan “about the pressures to overload the WTO. We are not in favour of bringing in new issues.”

However, he said, some members feel that it is in their interest to launch a comprehensive new Round. From next year there will be moves to bring up the subject, and at the next Ministerial Conference there will be attempts to bring in new issues under a New Round.

On the labour issue, Narayanan said developing countries which are all opposed to bringing it into WTO, must prepare to deal with it as there were indications that for the EU and US this issue was even more important than the investment issue.

Narayanan said the capacity of developing countries in preparing for negotiations is limited. Whilst thanking the Third World Network for organising the seminar, which he said had useful presentations and papers, he requested TWN to continue to help developing-country delegations and equip them with inputs on a continuous basis.

Mr. Chakravarthi Raghavan, Chief Editor of the South-North Development Monitor, who chaired the seminar and panel, said that while developing countries, given their varying situations, may find it difficult to take a common position. But the differences among them was much less than the very large differences with the industrial world. They hence need to adopt one stance: all developing countries must speak up and support the views of other developing countries or another developing country, not only when it coincides with their own, but also so long as their own particular interests were not affected adversely.

For far too long, he said, developing countries had allowed themselves to be mesmerized by the slogans and catch-words about the WTO and the rules-based trading system, and that free trade and liberalization will automatically bring them benefits, or that any attempt to ‘revisit’ the agreements would upset the balance of carefully negotiated rights and obligations and developing countries would need to pay a price for that.

This was unacceptable, and not only because the developing countries had no real say in the Uruguay Round negotiations, but also because of need to rectify the imbalances and inequities.

The GATT 1947 was the result of the prolonged negotiations in three committees that prepared for the Havana Charter. And yet, there was a major review process that took place in 1955, without any talk of upsetting the balance of rights and obligations.

It was also argued that the developing countries need the WTO, and not the developed. This was a myth. The developed nations benefited most, and need the WTO and the access to the markets of developing countries in goods, services and intellectual property, and the power-based enforcement system of the WTO. It was time developing countries recognize that the WTO and its system, as in the Aesop’s fables, was an emperor without clothes.-SUNS4742

About the writer: Martin Khor is Director of the Third World Network.

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