More steamrollering of South at Seattle?

by Chakravarthi Raghavan

Geneva, 30 July -- Trade negotiators preparing for the Seattle Ministerial Conference (30 November - 3 December) have ended an intense round of formal and informal talks on a range of proposals within current WTO remit and new areas (that US, EC and Japan want to bring into WTO).

The negotiators will come back in September, after the summer recess in August, to begin a drafting and negotiating exercise for recommendations to the Ministers.

Over 140 proposals have so far been put forward: the proponents have explained them, and have responded to some questions and comments, but so far it has been mostly monologues or talking past each other.

Perhaps, it is a genuine case of inadequacy of the WTO media office, or difficulty of going beyond 'sound-bites' and focus on interests of all members and media, rather than those of the US and Europe only.

But a media briefing on the General Council was told Thursday, by the chief spokesman of the WTO, Mr. Keith Rockwell: "this meeting has been 'talk about talks'. There have been a lot of proposals, but I don't know any of them... no one has been able to digest all the details of all the proposals, but the secretariat has been asked to produce a list of all the proposals and their synopsis..."

Perhaps trade negotiators -- who have been asked by Venezuela to promote a better public image of the WTO and globalization, through a public relations firm, or increasing the budget of the media office -- might look at the secretariat and its approach to public information. As in other organizations, but much more at the WTO, the focus is on publicity for heads of organizations and including press clippings favourable to the WTO in the daily press review (to influence members), instead of focus on issues that concern the public.

Formally and officially, the proposals are all 'restricted' documents, though in practice conscientious media persons can get hold of them and bring things to public attention. Unlike in the old GATT, the reach of the new range of proposals from the industrialized nations will further destroy the autonomy of action of countries to promote public interest of their citizens, in favour of welfare of corporations of the North.

Judged by the content of some of the papers, particularly those that have been put forward in this month, and the exposition by the majors on what they want, there is a yawning gulf between the major industrial nations themselves, and an even greater one between the South and the North.

Even the implementation problems and issues, on which several developing countries have put forward papers and their positions, though the major industrial nations have been making noises about wanting to consider them and take on board these problems, so far there is no basic change.

At Singapore in December 1996, implementation issues got short shrift, and the then WTO Director-General Renato Ruggiero and the major powers claimed that this principal agenda issue had been addressed through speeches of Ministers in the plenary (to virtually empty halls), and nothing further was required.

The outrage this created in Southern civil society -- many of whose non-government activists saw that their own governments did not know the new and substantive issues of interest to the North being addressed and negotiated in a small group, where a few developing countries were facing all the majors and pressured to yield -- was forcefully voiced at the final press conference by Ruggiero, the Singapore Minister who chaired that conference. This forced the WTO leadership and the industrial nations to reassess their public stance, if not their private actions.

At the time of the Geneva Ministerial (May 1998) there was again some talk of addressing implementation issues, but the preparatory process for that ministerial did not focus on them too much.

The ministerial meeting, and most of the governments, were taken aback by the anti-WTO demonstrations and the intensity of anger voiced against the WTO trading system, (as a non-transparent and undemocratic decision-making body, catering to transnational corporate greed and particular forms of 'globalization' to 'disarm' the state in countries and 'empower' corporations to the detriment of the public and the poor.

According to many indications, the Seattle meeting too will witness a similar outpouring against the system.

But the US and the EC - and even some of the developing nations (some of whom are now more vehement proponents of 'neo-liberal dogmas' than its authors - seem to think they can contain the growing popular opposition to the WTO and its globalization process by using some populist language of their own, such as in the Deputy USTR Amb. Susan Esserman speech at the formal General Council Thursday evening, or the EC's paper about its approach to possible decisions at Seattle.

The majors seem to think that opposition can be diverted or derailed by talking about institutional reforms for 'transparency' and 'openness to civil society' -- providing cosmetic changes of interest to some of the pro-establishment international NGOs based around Geneva (such as filing amicus curie briefs, being able to attend dispute settlement hearings etc); the US view of 'coherence' through WTO collaboration with World Bank, IMF, the ILO, UNEP, UNDP and UNCTAD.

The heads of these institutions may think that by such collaboration they could alleviate some of the problems or voice the views of their constituents. And given the fact of 'power' in the UN system and its specialized agencies, the Bretton Woods and WTO, the US and EU may even make the heads of other institutions to promote a similar view.

But without substantial changes and demonstrated willingness to change, such association and collaboration may make these institutions, share responsibilities and odium without any power or influence to change, and thus a target of public alienation if not anger.

At the Geneva Ministerial Conference, both in the official meetings held behind barricades and barbed wires, and certainly in the final press conferences, USTR Mme. Barshevsky said on implementation, "we implement our commitments, and you implement yours."

While seemingly moving away from that stance, Esserman's statement at the General Council Thursday was not very reassuring to developing countries, even if it is viewed as an opening negotiating gambit.

She made clear that the US expects all members to implement by the end of this year their Uruguay Round commitments under TRIPS, TRIMs, Subsidies and Customs Evaluation.

In "succeeding years", she said, the final liberalization commitments under the Textiles and Clothing Agreement as well as some aspects of TRIPS (presumably a reference to product patents for pharmaceuticals and chemicals, where some developing nations have time till 1, January 2005) and Subsidies Agreement.

"These commitments represent the balance of concessions which allowed completion of the Uruguay Round and have helped realize its benefits since then," she said -- though most studies have now come to the view that the original estimations (of GATT, World Bank, OECD etc) of benefits to the developing world have been belied, and the econometric projections have been more like astrological predictions in weekly newspaper columns.

"Blanket extensions and exceptions to key disciplines would unravel the balance we secured in the Uruguay Round," Esserman insisted, adding as a sop to the developing countries that the US was prepared to consider them on a "case-by-case basis", and where there are legitimate problems "find ways to address them."

The Esserman speech wanted the new negotiations to focus on market access in agriculture - by completely eliminating and prohibiting all remaining export subsidies, substantially reducing domestic support and disciplining all production-related supports, and lowering and binding tariffs. She also wanted disciplines to ensure trade in agricultural bio-technology products are based on transparent and predictable processes.

The US also wanted further liberalization in services trade (where developing countries are being pressed to open up more of their sectors), and continuance of the standstill on 'no tariffs' on e-commerce. Once consensus on the agenda is obtained, she said, an appropriate negotiating structure could be adopted. As for other issues, she suggested that the negotiating agenda could be complemented and balanced by a work programme to address any areas where there was now no consensus, as well as by measures to improve WTO's functioning.

In this area of work programme, the US wanted the WTO to take on the issue of 'inter-section of trade and core labour standards', as governments and industries wrestle with globalization and adjustment. The WTO should establish a 'forward work programme' to address the trade issues - of child labour, operation of export processing zones etc - related to labour standards. In this regard the US wanted specific institutional links between the WTO and ILO. In its future work, the US also wanted contacts of "stake-holder" (presumably business corporations, and some NGOs).

The EC's approach to the negotiations, which its deputy-director general for external relations, Mr. Peter Carl outlined in a paper, and had previewed it at a press conference, showed that while appearing to be more conciliatory, the EC was intent on bringing on to the trade agenda the many issues of interest to the North and its corporations, that fell by the way-side at Punta del Este (when the Uruguay Round negotiations were launched), at Geneva and Marrakesh (when the negotiations were concluded with the WTO and its annexed agreements). Though Carl denied it, there was little doubt that both the US and EC want developing countries to take more obligations in return for further promises to carry out the North's commitments.

The EC has said it is ready to take up and talk on its commitments to continue the reform process for liberalization of agriculture sector, but its interlocutors on the other side, mainly the developing country temperate zone agricultural exporters, have been left in little doubt that without a start to investment rules, nothing can be expected in terms of actual substantial market access, cut in domestic subsidies or export subsidies.

A different perspective came from Pakistan's Amb. Munir Akram (who spoke also on behalf of Dominican Republic, Honduras, and Indonesia) -- views that the WTO press office said had been shared in some off-the-cuff comments by India's Amb. Narayanan. Akram's statement (which was made available to the media) underscored paragraph 8 of the Geneva Ministerial declaration calling for an "evaluation of the implementation of individual agreements and the realization of their objectives". Such a review and discussion, in an integrated manner, of "implementation issues" had not taken place in the General Council and its Seattle preparatory process. The on-going discussions on Para 9 (a) (i) on implementation issues had led to identification of some of the issues, but they had not resulted in a comprehensive overview of implementation of individual agreements in relation to realization of their objectives. This evaluation required the Council to look at objectives of individual agreements, how far implementation had led to attainment of objectives, problems encountered in implementation, and the impact of these problems on trade and development prospects of Members.

Any evaluation, the statement said, should assess how far the implementation of individual agreements has resulted in realization of the key objectives of expanding production of, and trade in, goods and services; ensuring developing countries, especially LDCs, securing share in growth of international trade, commensurate with needs of their economic development; and ensuring that arrangements entered into are "mutually advantageous."

"An objective assessment (of these elements), does not give reasons for much cheer," Akram said. He referred in this connection to the studies that were put out (just before the conclusion of the Uruguay Round, UR) by the OECD, World Bank and the GATT, and after Marrakesh too (by GATT) that liberalization measures would boost world income by an annual 1 percent or $200 to $500 billion, and of rise in growth of world trade, according to assumptions, in the range of 6-20 percent a year - over the base levels of annual 4% expected even if UR liberalization did not take place. "These expectations remain unfulfilled," Akram said.

The statement then outlined the unsatisfactory outcome and benefits to developing countries in the implementation of the Agreements on Textiles and Clothing, Agriculture, Safeguard Measures, Anti-Dumping and Subsidies agreements including the tendency to use investigations to get exporting countries to agree to restrain exports, Rules of Origin, GATS, the barriers faced by developing country exports in developed country markets (through tariffs and other measures), the restrictive TRIPS, TRIMS agreements, and those on Technical Barriers to Trade and the Sanitary and Phyto-sanitary Agreements.

On the last, Akram complained that these agreements imposed "international" standards as a basis for national regulations. When these agreements were concluded these standards were supposed to be adopted by consensus. But with 'increasing politicisation' of standard setting, in response to consumer and environment lobbies, it was increasingly becoming difficult to achieve standards by consensus.

"In the last few years, hardly any of the standards adopted in Codex Alimantarius Commission on food products were adopted by consensus. Even the standard on hormones treated meat, which has become a contentious matter, was adopted by a slender majority vote. This raised the question whether countries that voted against a standard were bound to base their technical or sanitary regulations on such standards.

"This issue is of importance, as increasingly the work in organizations like Codex Alimentarius Commission would be focused on the development of standards for products produced by applying bio-technology or genetic engineering."

Even more, most developing countries were unable to participate effectively in work of international standardization activities. And though this issue had been raised in the WTO discussions, "very few steps have been taken to facilitate effective participate of developing countries in these bodies."

Among other implementation issues, Akram also complained that the multilateral rules have been unable to prevent emergence, or even persistence, of measures totally contrary to fundamental WTO objectives and principles. The WTO had adopted a "rules-based system" with a comprehensive dispute settlement system, which was expected to end the earlier practices of major developed countries to bring pressures on developing countries to secure changes in trade policies.

In a reference to the United States (without mentioning it by name) and its 'S.301 family of laws', Akram added: "But these expectation have been belied. In one major trading country, a law remains on its statute and which is used to pressure countries to change policies or take measures that, in the view of that country, affect its trade interests or are not consistent with WTO rules."

As trade diplomats recessed their discussions, and their capitals study the various proposals tabled so far (and some more are expected) and do some assessment of their own, before returning to Geneva for more negotiations (on a draft declaration and recommendations to ministers), there is a clear perception of basic conflict and gap between the positions of developing countries focusing on 'implementation' and that of industrial nations pushing for more access in the developing world to exports of goods and services of their corporations.

Unlike during the Uruguay Round or earlier GATT negotiations, both domestic enterprises (big, small and medium) of developing countries and other sections of civil society are now very aware of the issues and the need to resist further inroads.

Among many activist NGOs of the South, the demand is for a "roll- back" of some of the commitments and obligations undertaken, often without full understanding of the implications and behind the backs of their parliaments (who were faced with a 'there is no alternative' plea for accepting and implementing the Marrakesh agreement).

There are demands in civil society of the South, and with increasing support from the enterprise sectors, not to take up any more obligations, whether through new rules or even the traditional GATT exercise of more tariff cuts and bindings - but roll-back some of the commitments already undertaken.

Many developing country economists and institutions are beginning to say that if the developing world is to industrialize and provide more employment, capital accumulation and technical capacity, not only are changes needed in some of the new restrictions on their capacity (TRIPS, TRIMS, GATS and rules on subsidies etc), but also a need to revisit some of the rules based on a view of trade in goods as mobile and factors of production as immobile.

For e.g. there is the view (voiced at the recent New York seminar organized by Prof Bhagwati even by the OECD Secretary-General, former GATT Director-General Arthur Dunkel and UNCTAD Secretary- General Rubens Ricupero) that in the new era of transnational globalization, and the neo-mercantalist policies of major industrial countries to promote the interests of their corporation, developing countries need more, not less flexibility in terms of rules and disciplines in the WTO.

While these personalities have not gone as far as trade experts and political economists of the developing world, the latter even argue for an end to the old GATT concept that developing countries wanting to establish new industries and give them some 'infant-industry protection' in the initial period should be able to do so, by raising tariffs and other instruments, without having to 'compensate' their trading partners (as they are now required under the provisions in Sections A and C of GATT Art. XVIII. The leeway that the industrialized countries have to protect their 'established', even senescent industries, through 'safeguard actions', and without compensation to trading partners, has only to be compared to the restrictions on developing countries promoting new industries in their countries to understand the built-in inequities.

In this view, economists and trade experts, see justification in developing countries scepticism over the drive for drastic reductions in their industrial tariffs, and against 'binding' their 'applied' tariffs in GATT and WTO.

They also see need to either get 'flexibility', to be exercised autonomously, over local content and other obligations under TRIMs, to ensure that TNCs setting up industries adopt policies of forward and backward linkages in the domestic economy or a 'roll-back' of the provisions.

These have become more important - given the way (as in the Indonesia car panel ruling, the banana panel ruling and some others), the dispute settlement process has been used to extend the obligations of the WTO agreements, by interpreting the agreements and their obligations as 'cumulative'.

If changes are not brought about in the negotiating process, but resisted by the major blocs who are now the beneficiaries, then the populist cry against the WTO will acquire a momentum of its own in the next century, and have some consequences for new negotiations. (SUNS4489)

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

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