Focus on redressing WTO inequities, say developing countries

At a meeting of the WTO General Council on 19 February 1998, a
number of developing countries came out strongly in support
of raising the issue of implementation of the WTO agreements
at the WTO Ministerial meeting in May 1998. Future
activities, they added, should focus on the built-in agenda
and address the inherent inequities in the agreements.

by Chakravarthi Raghavan

GENEVA: The Ministerial Conference of the World Trade
Organization, to be held in Geneva on 18 and 19 May, should
focus primarily on the issues of implementation and orient its
future activities around the built-in agenda and tackling the
inequities in the system which has shown up in the
implementation. This view was urged at the WTO General Council
on 19 February by a number of developing countries.

The WTO spokesman confirmed that consultations at the
informal meeting of heads of delegations of the Council have
not so far resulted in any consensus on the modalities for
concluding the meeting - a Chairman's summing-up, a short
declaration or some other document - nor on the proposals for
agreeing to a process in 1998 that could lead to decisions
about future activities at the 1999 Ministerial.

Implementation and future activities

This last is an euphemism for the EC proposal for a so-called
millennium round of trade negotiations, involving some of the
existing issues on the built-in agenda (agriculture and
services) and the new issues promoted by the EC and the US -
investment, competition, government procurement and so on.

The Ministerial sessions on 18 and 19 May, are to deal with
implementat-ion and future activities. The formal sessions are
to be followed by a separate meeting on the 20th for observing
the 50th anniversary of the GATT trading system.

On 19 February, when the issue came up at the General
Council, a number of developing countries made statements
strongly in support of "implementation" of the WTO agreements
being given the primary focus. The developing countries also
called for "transparency" in any conclusion or outcome of these

A number of developing countries in the informal
consultations and at the meeting have been stressing that the
"implementation" issue should not be made into mere
"statements" by Ministers, as happened at Singapore, without
any serious discussions and conclusions.

Egypt, Pakistan (which chairs the informal developing
country group), Jamaica, Nigeria, Bangladesh (for the least
developed countries), and Brunei (for the ASEAN) made this
point. India said even the future activities should primarily
focus on the built-in agenda and the existing inequities in the
agreements and in their implementation.

Review of the ATC

On other matters, the General Council took note of the report
and decisions of the Council for Trade in Goods which had
earlier completed its Major Review of the Implementation of the
Agreement on Textiles and Clothing in the first stage of the
integration process.

The "consensus decision-making process" of the Goods
Council, giving the importing countries (as in the Textile
Monitoring Body) a veto power against any firm conclusions, and
perpetuating the built-in inequities of the WTO accords and
rules, comes out in the report of the Review.

While recording the dissatisfaction of the exporting
developing countries on the lack of meaningful liberalisation,
the Goods Council reiterated the commitment of Members to the
"full and faithful" implementation of all provisions of the

The Council noted that, as specified in Article 9, the ATC
and all restrictions under it "shall stand terminated on 1
January 2005, on which date the textiles and clothing sector
shall be fully integrated into GATT 1994 and that there shall
be no extension of the ATC."

Developing exporting countries took satisfaction from what
a member of the International Textiles and Clothing Bureau
called, reiteration of a notice to the industry in Europe and
North America that the ATC would end, and there would be no
more extensions.

Even this statement of the obvious, in terms of the
provisions of the WTO's ATC, was resisted by the major
importing countries.

While noting that the importing countries had fulfilled the
legal requirements for integration of the textiles and clothing
products into GATT 1994 in the first two stages, the Goods
Council in its review said these programmes had included only
a small number of products which had been actually under quota
restrictions, "leaving a large number of products for which
quota restrictions would need to be eliminated."

The Goods Council called on members to allow "for continuous
autonomous industrial adjustment and increased competition" in
their markets in order to facilitate integration of the sector
into GATT 1994, and said that further information in this
regard would facilitate the review of the progress.

Complaints and concerns of the South

The Review noted the complaints and concerns of exporting
members about the resort to a large number of transitional
safeguard measures (by the US) in the first year of the ATC and
that this could not be considered a "sparing use of
safeguards", particularly when in most cases the recourse had
been found to be unjustified.

The Review report also refers to the complaints of
developing countries about the changes in the Rules of Origin
introduced by the US, and their view that these were unilateral
actions and inconsistent with the ATC, the WTO accord on Rules
of Origin, and the MFN clause of GATT 1994. It notes the view
of the exporting members that the changes in Rules of Origin,
in sum, had upset the balance of rights and obligations,
adversely affected access, impeded full utilization of quotas
and had disrupted trade in textiles and clothing from exporting

Another issue relating to the US practice was also aired in
the Review process. This relates to the US requirement that
shipments of textiles and clothing products from developing
countries must come with a "visa" document, whereby the
exporting country certifies the origin of the product and asks
for the export to be debited against its quota.

This was the practice of the old Multi-Fibre Agreement
(MFA), under which the quotas on imports were administered by
the exporting countries.

But when products have been integrated into the GATT 1994
under the ATC, there are no quotas on them, and imports and
formalities relating to them are to be administered on an MFN

This means that if the US did not demand a "visa"
requirement or document for imports from the EC, it could not
ask for this from other countries either.

Yet, the US has been demanding such a "visa" to accompany
textile and clothing products imported into the US from some 14
exporting developing countries in respect of their exports of
products which supposedly have been integrated by the US into
GATT 1994.

The US has been asking the exporting countries to
voluntarily comply with this requirement - claiming that it is
necessary to enable the US to ensure there is no circumvention.

But under the normal safeguards rules of the GATT 1994,
which is to apply to all textiles and clothing products
integrated into the WTO/GATT 1994, there is no scope to ask any
exporting country to undertake some restraint on a voluntary

But the desire of the developing exporters to avoid trade
harassment is such that no one has so far brought up the
complaint against the US as a dispute. The WTO's dispute
settlement mechanism, one exporting country representative
explained, is a very costly process, and over and above there
is the intermediary of a TMB that has to be crossed. Another
issue brought up in the Review has been the recourse to anti-
dumping investigations and measures by the European Community.

A major complaint of the exporting countries has been that
the EC has been resorting to the start of anti-dumping
investigations, and levy of provisional duties on products that
are already under quota restraints, thus creating a double
barrier to exports.

The Goods Council Review report notes the complaints and
concerns of the exporting members over the way the anti-dumping
measures have been initiated, and "double protection"
exercised, and the view of exporters that such actions "touched
the very essence of the objective of trade liberalization which
the ATC was meant to bring about and could be considered
tantamount to trade harassment."

Recording too, the EC's view that its application of anti-
dumping legislation was fully in conformity with WTO rules, and
was done in a transparent and non-discriminatory manner across
all sectors, the Goods Council Review ends with a very weak
conclusion - another example of the veto power that the
importers can exercise.

The Goods Council Review says on this: "Recalling the
concerns of some Members regarding the use of trade measures in
respect of textiles and clothing products, including those
which were already under restraint, the Council called on
Members to observe the relevant WTO provisions to ensure the
application of policies relating to fair and equitable trading
conditions regarding textiles and clothing products in areas
including inter alia, dumping and anti-dumping rules and

At the Goods Council discussions for adopting the report,
the EC representative, Mr. Abbot argued that India, which had
complained about the anti-dumping measures had itself resorted
to anti-dumping actions recently, including on acrylic fibres,
and that India's normal duty was about 36% while that of the EC
was about 6%.

This brought a retort from the Indian Ambassador, Mr.
Narayanan, who noted that while India had tariffs on imports,
there were no quotas as the EC had.

In the report adopted, the Goods Council emphasized the
importance of its overseeing and regularly evaluating the
progress of the integration, but qualified and weakened by
putting in the context of Art. 8 of the ATC - the TMB route for
a case-by-case consideration, a very frustrating experience
given that the TMB has often avoided giving decisions or
reviewing its mis-decisions.- (Third World Economics No. 179/180,
16 Feb-15 March 1998)

Chakravarthi Raghavan is the Chief Editor of the SUNS from which the above article first appeared.