SMC opens, amidst doubts and controversies

SINGAPORE 9 DECEMBER: The First Ministerial Conference of the World Trade Organization opened here at Singapore's SUNTAC (Conference Centre), with the Singapore Prime Minister attempting to limit damage to the normal business caused by controversies to inject new issues on the WTO agenda.

Goh Chok Tong suggested to the inaugural session that if the WTO is not to be distracted from its central goal of promoting and safeguarding the "multilateral free trade regime", there should be early clarification and agreement on whether these issues (multilateral investment rules and labour standards) are directly related to international trade, and whether the WTO was the most appropriate forum to discuss these issues meaningfully.

"Only then can the WTO move forward with sure-footed confidence and clarity of vision into the future," he added.

Participants and observers interpreted this as a Singapore move to get some kind of a study group going to address, either the drawing up of "criteria" for the WTO to take up new issues or some process merely to address these two.

But whether it would help resolve the controversy, and whether protagonists on either side will accept this, is not at all clear.

The acting US Trade Representative, Ms Charlene Barshefsky, was quoted in the Wall Street Journal as saying that the WTO Director-General, Renato Ruggiero, had informed her that the EC was making its support for a successful agreement on Information Technology (being pushed by the US) at the SMC (and to be mentioned in the Ministerial Declaration), as dependent on the content of the overall Declaration emerging from the meeting here.

The EC is pushing for works to start, even as an exploratory process, on investment issues; the US wants the Declaration to have a ringing affirmation of `core labour standards' and the work for a transparency component in government procurement (the corruption issue, raised by it as a cover for opening up government procurement in developing countries to US corporations).

At a meeting on 8 December evening of the key group of some ten countries (including Egypt, Ghana, India, Sri Lanka, Malaysia, Indonesia, Tanzania, Haiti and Uganda), the Ministers reiterated their opposition to bringing on to the WTO agenda, either the investment issue or labour standards, or any other new issues.

"All the Ministers were of the view that there can be no compromise on these, neither in a study process, or mention in the Ministerial Declaration or even a Chairman's closing speech," one of the participants who did not want to be identified, later said.

These and other pronouncements, and small caucuses, sub- regional and regional, pushing their own agendas, seemed to put further into the background the main agenda of the WTO Ministerial meeting- the review of the implementation of the Uruguay Round accords.

And the WTO secretariat had some bad news, for those who are accustomed to read its literature and can get behind the gloss often put over such material. The bad news, of a deceleration of trade growth in the world, is buried deep in its survey of world trade. In its annual report released here (without any fanfare, unlike a chapter on investment issued in advance, in October), the WTO secretariat said that there will be a stronger slowdown in world merchandise trade growth in 1996 than predicted at the beginning of this year.

In volume terms, trade growth will be about five percent in 1996, compared to eight percent in 1995, the WTO secretariat said.

Given the consistent over-estimation characteristic of the WTO economists and their projections, the trade growth deceleration on the basis of actuals and full data will turn out to be greater.

The secretariat said, while world GDP growth in 1996 will remain roughly unchanged, the value of world merchandise trade is estimated to have slowed from an annual increase of 19% in 1995 to less than 5% in the first half of 1996 (relative to the same period in 1995).

While part of the deceleration is attributed to developments in dollar price, the report concedes that exchange rates are not the only factor at work. The deceleration or sluggishness of growth is also identified as a factor.

[In June this year, at the Lyons G-7 Summit, the IMF head, Michael Camdessus, had projected that the slowing down of the world economy is likely to come much sooner than anticipated before the end of the decade.]

This marked slowing has been observed in North America, Latin America, Western Europe and Asia. Both imports and exports have slowed down.

Controversies over new issues

And as the first Ministerial Conference, the SMC (Singapore Ministerial Conference, as it has been called this year), officially began, the controversies surrounding efforts to put new issues on the WTO trade agenda continued to swirl around, both inside and outside the halls of the conference centre where the WTO-SMC is meeting.

At some pre-Conference regional and special group caucuses, there was a perceptible hardening of positions.

These could merely be an initial stance of bluff and counter-bluff that has become a hall-mark of the non- transparent WTO/GATT system of "negotiations".

However, there was also a perception among many participants that the manner in which these issues have been handled in the year-long preparatory process, has created a feeling among several developing countries, of an effort by the WTO power-structure and the power-brokers to manipulate them.

This feeling has been particularly evident, and has muddied the negotiating processes, over the efforts to get on to the WTO agenda, the investment issue and the labour standards issue - with key delegates in private accusing each other, and the "WTO leadership" - WTO Director-General, Renato Ruggiero and General Council Chair, William Rossier of Switzerland. Host country Singapore-which has deployed its full diplomatic skills over the last few months to ensure a successful and smooth Conference by seeking to promote a consensus -has not been able to escape from this finger- pointing.

Even what could have been less controversial - an "invitation" to the ILO Director-General, Michel Hansenne, to speak at the plenary meeting - became very controversial, evoking complaints of "manipulation" and something worse. The "invitation" (whether one was issued and withdrawn as the ILO made it known, or informally promised but could not be `delivered' by those who had promised it, as the WTO sources explained) was sought to be promoted on the basis that Hansenne would in any event be in Singapore (for the ICFTU meetings) and it was just a matter of courtesy.

And a news story, based on information apparently put out by the ILO press office, that an invitation that had originally been issued to Hansenne to attend the SMC and speak there (India and Pakistan were identified as those who blocked the invitation), had been withdrawn and therefore Hansenne won't be travelling to Singapore, has made some of the opponents of the new issues angrier.

They accused the ILO chief, and the WTO "leaders" of trying to manipulate information and arouse public opinion against their countries through misrepresentation.

As they explained it, on background basis, there had been initial efforts to get Singapore as host to issue an "invitation", but Singapore decided this was beyond its authority and rights. After further cogitations, the subject was brought up before an informal HOD meet of a restricted group of countries on 3 December, when several participants objected on one ground or the other. These ranged from objections that one "observer" in a subordinate body (a GATS body dealing with movement of natural persons) was being given special treatment while another, the OAU, was denied þ to the process as well as the labour standards issue not on the agenda being brought up by Hansenne before the WTO, when he had no mandate for it even from the ILO Governing Body.

Egyptian Ambassador to ILO and other UN bodies in Geneva, who also chairs the Government group in the Governing Body, told an NGO meeting, that at the just ended Governing Body meeting, only four governments favoured the labour issue at the WTO, the employers' group was totally opposed, and the workers' groups, by and large, favoured it.

Statements from some sponsors that they had seen a draft of the Hansenne speech and it was non-controversial appear to have merely added to the controversies and suspicion of the WTO power structure.

The WTO head's views about his office (as quoted in a Wall Street Journal report last week, a report that was not included in the WTO's daily newspaper clippings circulated to delegations) and his agenda for the WTO (which includes investment rules) have only added to the polarization of views. Ruggiero was quoted by the WSJ as saying (in explaining his attempts to get to heads of government over the heads of their Geneva bureaucrats, to get investment on the WTO agenda): "I'm not saying this just because I have a Napoleonic complex. But when I meet these leaders, and they meet me, well, I am the leader of the WTO eh? When people judge the success of the WTO, they judge the success of the Ruggiero agenda."

To Geneva trade envoys, this seemed to be a case not of Ruggiero's "Napoleonic complex", but one of not functioning in terms of his authority under WTO rules, but having a "megalomaniac" ambition to expand his empire.

As a result, there was no consensus (and the proposal could not go through, like many others before). At a press briefing on 8 December, WTO spokesman, Keith Rockwell, said that there was no consensus at the WTO on the invitation to Hansenne to speak, and since the WTO functioned only on the basis of consensus, no invitation could be issued.

In the speeches at the plenary, Canada, the EC Commission and Brazil came out in support of a process at the WTO to take up the investment issue.

The EC was rather weak on the labour standards question, with several of its member states, like Britain and Germany, clearly rejecting its inclusion in the Declaration or a WTO work programme.

The US in contrast, came out ringingly for labour standards and the government procurement question, as well as the need for an Information Technology Agreement, but was soft on the investment issue.

India, one of the last speakers in the first day's plenary, came out strongly against the investment issue, taking the position that a multilateral investment agreement is not in the interests of the developing countries and the WTO should concern itself only with trade, namely, exchange of goods and services among countries, and not the production systems of countries (which is what the investment regime is all about). A study process should be in UNCTAD, which is a more transparent and universal forum, as mandated by UNCTAD-IX. India also did not see any purpose in bringing the "core labour standards" issue on the WTO agenda, except for a possible use of trade measures to enforce labour standards, if not now, in the future.

Meanwhile, Third World NGOs involved in development, environment and other questions, came out strongly opposing expansion of the scope and powers of the WTO and rejected the idea of putting investment questions or labour standards on the WTO agenda.

On labour standards, they said, while the objectives of several Northern groups were laudable, it will be counter- productive and would actually retard the efforts of civil society in their countries to bring pressure on their governments to uphold human rights and labour standards. Within the WTO it would be used by the powerful nations as a protectionist instrument. (CR/SUNS3888)

  The above first appeared in the SUNS of which Chakravarthi Raghavan is the Chief Editor.