Closing window of opportunity to reform WTO system?

WTO members met recently in the Trade Negotiations Committee to assess the progress made in implementing the work programme launched by the Doha Ministerial Conference. It became apparent from the US’ and EC’s presentations that, as they attempt to shape the outcome of the Doha-mandated talks in their mercantilist interests, the two trading powers are not prepared to address issues of concern to the developing countries.

GENEVA: Amid a sharply deteriorating global economic environment and crisis of confidence due to the long non-functioning money and finance systems, the two dominant players in the WTO multilateral trading system appear to have joined in trying to close the small window of opportunity for systemic reform in attempts to further corporate greed.

“It has not yet been banged shut, but [is] in danger of this,” an observer at the WTO’s Trade Negotiations Committee (TNC) meeting on 18-19 July commented unattributively outside after the meeting.

Far from demonstrating a will to address the “development and democratic deficits” of the multilateral trading system, the US and the EC, by their stance at the TNC meeting, have left little doubt that the various problems and issues raised by developing countries, collectively or in groups, will receive little attention (and, as in previous negotiating rounds, will fall by the wayside or languish as the subjects of “work programmes”) while they attempt to complete the takeover of the economic space of developing countries and prevent their emergence as competitors, by pushing the liberalization of services, writing new rules on the “Singapore issues” and protecting their home markets in agriculture or the ‘mature’ manufacturing sectors.

The US and the EC sent out a clear message to the developing countries not to expect anything from the discussions on implementation issues in the various WTO bodies and on the issue of special and differential (S&D) treatment in the Special Sessions of the Committee on Trade and Development.

If these positions came as a surprise or disappointment to the developing countries - small, medium and big - perhaps they have only themselves to blame, for not paying attention to past history at the trade system, but allowing themselves before and at Doha, and since then at Geneva, to be fooled by cleverly drafted language.

Though the developing-country trade ambassadors and delegates who intervened and spoke at the TNC meeting struck a “positive tone,” as one observer at the meeting put it, in terms of the assessment of the progress made on the Doha work programme, these were at best a preface to their views about lack of progress in major areas of concern to the developing world.

After ramming through at Doha a new round of multilateral trade negotiations encompassing their corporate neo-mercantilist agendas as a “single undertaking”, the US and EC (with Canada and Japan tagging along under the Quad label as major players, almost akin to the veto-wielding permanent members of the UN Security Council), as also the WTO secretariat, have been trying to quieten the growing civil society protest movements against the WTO as an instrument and symbol of corporate-led globalization.

At Doha and since then, they have been making some noises about “development”, proclaiming the Doha work programme as the “Doha Development Agenda” and trying to get the developing countries to become more active and formulate their proposals and concerns.

Several of them did so, under the rubric of “implementation” and “special and differential treatment,” which, unlike several of the issues mandated for study by working groups, has been made part of the negotiating agenda of the single undertaking, and with some earlier deadlines for progress (end-July to end-2002) than the issues of agriculture, services, market access and other rules negotiations, or “modalities” for negotiating rules on the “Singapore issues” (i.e., investment, competition policy, government procurement and trade facilitation).

In their interventions, the US and the EC have left little doubt, however, that while they would indulge the developing countries in listening to their talk about implementation proposals and S&D treatment, nothing concrete will emerge until the new round of negotiations is concluded (the state of the world economy casts some doubts on this score) with agreements satisfactory to the two majors; even then perhaps only some small accommodations would be considered on a case-by-case basis.

US, EC intransigence

At the TNC on 18-19 July, the chairpersons of the negotiating groups on agriculture, services, market access, TRIPS (in terms of both TRIPS and public health, and the built-in agenda issues including geographical indications), rules and regional trade agreements, S&D, and on the review of the Dispute Settlement Understanding, gave progress reports that perhaps (to the outsiders) concealed more than they revealed. It was as if the active delegations had agreed tacitly, over their informal talks at luncheons and dinners, not to rock the boat at this point, with current WTO Director-General Mike Moore due to leave end-August to be succeeded by Supachai Panitchpakdi from 1 September. (However, the joint press conference held by Moore and Supachai on 18 July suggested that there would be a change of style and perhaps more articulate views, but little else. In any event, to believe that secretariat heads and officials could “pull chestnuts out of the fire” for the developing-country negotiators is more a sign of weakness on their part.)

At the TNC, the US Deputy Trade Representative Peter Allgeier and the EC’s Director-General for Trade Peter Carl waited until the “roadblock” created by the developing world on a timeline for formulating modalities on market-access negotiations had been cleared, without the developing countries gaining anything in relation to the deadlines on implementation or S&D treatment.

(The chairman of the negotiating group on market access for non-agricultural products, Ambassador Pierre-Luis Girard, told the TNC on 18 July that there was now an agreement that “there would be a common understanding on a possible outline of modalities by end of March 2003, with a view to reaching an agreement by 31 May 2003.” The wording was such that it seemed to be a fudging of language by which all sides could claim to have achieved their objectives. The EC had been holding everything else up unless a specific deadline of 31 March to agree on the modalities could be set. Several developing countries had resisted this, arguing that the Doha mandate provided for no deadline.)

In fact, at that stage, the US and EC made clear that nothing substantial, if at all, could be expected on either implementation or S&D treatment until the conclusion of the round, and far from a “reinvigorated” S&D approach, there would be more of the same (see following article).

Chile asked the industrialized countries to give a clear indication at least by the next Ministerial Conference in Cancun (in September 2003) of what they were prepared to do (but got pretty little from the US and EC which spoke later). Chile complained of the “inflexible” positions over the market-access negotiations and settling the procedural issue of modalities, while Uruguay spoke of the flexibility shown by developing countries on the issue.

Within the Latin American region, particularly the Southern Cone, the two have been going along with or pushing the other US and EC agendas and had fully supported the process to and at Doha - all in the hope of getting some benefits out of agriculture.

Chile also spoke of its worries about “events taking place outside the scope of the TNC”, namely lack of progress in ongoing discussions on implementation and S&D, as also actions taken outside but having a negative impact on work in Geneva, e.g., the US farm bill and the negative message it imparted about the willingness of one key player to engage meaningfully in negotiations. Chile also stressed the need to keep to deadlines to assure credibility to the process. The work on S&D and implementation, as also finding “an expeditious solution” by the end of the year to the problems of WTO members lacking manufacturing capacity in pharmaceuticals, Chile said, must be brought to a successful conclusion at the earliest possible time, since lack of progress could threaten the Doha work programme. All evidence showed that the present S&D disciplines do not work.

Brazil, which before Doha had participated actively in several of the informal meeting processes, came out strongly against anything being done that would prevent the ability and capacity of the Geneva negotiators and of the TNC to address all issues. This seemed to be clearly a reference to the several suggestions that have surfaced (including from the WTO secretariat, the US, the EC and others) favouring many mini-Ministerial meetings before Cancun. The Brazilian representative also insisted that the implementation issues had everything to do with development, and that countries like Brazil were pursuing them in good faith. Brazil was also concerned about the “differing interpretations” being given to paragraph 12 of the Doha Declaration (dealing with the Ministerial decisions on implementation issues), which makes agreements on the implementation issues (including where rules have to be changed) part of the single undertaking.

A number of other developing countries also stressed the issue of satisfactory outcome on implementation issues and the S&D questions, and said the success of Cancun would depend on this.

Earlier (but after the compromise on the modalities of the non-agricultural market access negotiations had been reached and announced), the EC and the US spoke in effect suggesting to others that the much-vaunted “development agenda” of Doha has perhaps got lost in its travels from the Qatari desert sands to Geneva and beyond.

The EC underscored that the single undertaking of the Doha Declaration applied to the conduct and conclusion of the work programme, and complained of the unevenness of progress, in effect pointing to a number of developing countries like India that the EC held responsible for the delay in adopting the work programme on market access. The Singapore issues were part of the single undertaking of the Doha work programme, the EC insisted, thereby effectively dismissing the view of several developing countries which have been pointing to the need for explicit consensus on modalities before negotiations on these issues are launched.

The EC was open to negotiations on the S&D issue, but said that decision on this could only be taken at Cancun. It also made clear that it could not accept any “blanket” exemptions from the rules for developing countries, but that it would be in effect a case-by-case decision or approach.

(The Doha Ministerial Declaration and Decision on Implementation-Related Issues and Concerns have called for review of the S&D provisions in the WTO rules with a view to strengthening them, and have asked the Committee on Trade and Development to submit clear recommendations for decision by the General Council by 31 July. Not only is this deadline going to be missed, but the EC and the US, as well as a number of other industrialized countries, have left little doubt that they plan not to allow decisions to be taken until the end of the entire negotiations, if at all.)

The US sought to provide a positive assessment of the prospects of the US Congress granting Trade Promotion Authority, and spoke of the administration working hard with Congress to secure this.

Trade diplomats in private conversations concede that in private meetings the US is somewhat on the defensive on this. But it is not at all clear, even if such an authority is given in a compromise between the House and Senate versions thereof, what it would mean given the various “specific consultations” set on a variety of local and regional protectionist issues.

On S&D, the US also underscored its view of the need to look at it carefully, and on the need to differentiate between the developing countries. On implementation, the US said that at the end of the day some of the proposals may not secure consensus, while consensus on others may only be gained at the conclusion of the negotiations on the broader Doha agenda.

Slower-than-expected progress

China’s Vice-Minister Long Yongtu spoke of the overall progress being “slower than we expected” and posing great challenges to achieve the objective of concluding the negotiations by 1 January 2005. He also spoke of the uncertainties in the world economy, the widening North-South gap and “rampant trade protectionism.” Long believed that a successful conclusion of the negotiations would be necessary to accelerate recovery and growth in the world economy, maintain confidence in the multilateral trading system, and put the development of “economic globalization on the right track.”

Long, who had negotiated China’s own accession to the WTO, said that the efforts of the newly acceeded members in implementing in a “conscientious manner” the “broad commitments” they made should be seen as “their contributions to trade liberalization and the new round of negotiations.”

“However,” added Long, “these commitments should not be taken as an excuse to force other members, especially the developing members, to undertake the same level of commitments.”

Earlier, China stressed that full implementation of the Uruguay Round agreements, in particular those on liberalization of textiles and market access of agricultural products, was of “significant interest” to developing countries and would “enhance the confidence” for participating in the multilateral trade negotiations. Resolving the implementation issues before the end of the year through concrete and effective measures was thus “the key and precondition” for a successful breakthrough in the current multilateral negotiations. Also, there was a need for a “practical approach” to address the concerns of the developing-country members.

Economic development was made the main objective of the Doha Development Agenda, and in the trade area the economic development of the developing countries was becoming increasingly important, said Long. Without the development of these economies, “there will be no real international trade.” Hence market access of agricultural products, textiles liberalization, market access in developed countries and the revision of the relevant rules were logically of great concern to developing members and should be addressed as priorities.

The provisions on S&D treatment were important elements in the WTO agreements and were of great importance to the developing countries, particularly the least developed countries, representing their important rights in the multilateral trading system. The Doha Declaration clearly provided for their review and strengthening, and making them “more precise, effective and operational.” Such a goal was critical to achieving a balance between rights and obligations for developing-country members, and China believed S&D treatment “shall not be merely a slogan, but rather integral parts of various agreements and concrete actions” on the part of the developed members.

In a reference to the opening remarks of Mike Moore as TNC chair making a distinction between the process and substance of negotiations and emphasizing the need to get on with the substance, India said there was a “close inter-relationship” between process and substance, and there could be substantive discussions only if the process was such that all members could prepare themselves adequately.

On the reports of the negotiating groups presented by the various chairmen, India placed on the plus side the entire negotiating structures being in place, the work programme having been decided in most cases, and substantive work having commenced in earnest in almost all negotiating groups and special sessions. However, to achieve the goals within the agreed time limits, it was necessary to spotlight the areas of halting progress or of other inhibiting factors.

The Doha work programme (negotiated over several months, with the bulk of the work at Geneva and with the “finishing touches” at Doha), India said, had two carefully negotiated elements - “a sequence of events with clearly defined deadlines and substantive issues defining the content of the negotiations.” Both formed an integral part of a composite package.

Certain events were to take place on 31 July, 31 December, 31 March and at the Cancun Ministerial. There was now a “grave danger of the sequence being broken at the first milestone itself, 31 July.”

The developing countries were all the more concerned as this deadline related to issues of vital importance to them, India said, drawing attention to the painful negotiations over implementation and other issues of concern to them before Doha, with many of them wanting to have these addressed upfront. An important element was the S&D issue, with a 31 July deadline; while there were a number of proposals on the table, not one of them has been the subject of substantive discussions so far. Lack of time could not be an excuse as several of them had been on the table since April. Similarly, some of the proposals on implementation issues (in paragraphs 4.4 and 4.5 of the Doha Ministerial Decision on implementation relating to the “growth-on-growth” on textiles and clothing quotas liberalization, and the countervailing duty investigation questions) were also due for resolution by 31 July.

The WTO, India recalled, had already failed to meet one deadline: completing work on harmonization of rules of origin by end-2001 (para 9.1 of the implementation decision).

On the one hand, there was a lack of enthusiasm on the part of certain members to discuss issues of high priority to the developing countries; on the other, unilateral protective actions were being taken by certain developed countries when their own industry was threatened in any way. Negotiations were also not proceeding at an even pace, thus jeopardizing the balance of the package.

“There is a disquieting disharmony between the spoken word and the practised deed which is sought to be explained away by domestic compulsions,” the Indian ambassador Mr. Chandrasekhar said. “We should all remember that there are domestic compulsions everywhere. An overly protectionist action in a developed country creates uncertainty and confusion in political and commercial circles in developing countries and there will be pressures for like response.”

This was particularly relevant when many parts of the world were facing situations of “economic meltdown” due to erratic financial flows and “even solutions offered by international and multilateral institutions are increasingly being questioned.” It was hence necessary to ensure that the process initiated and put together at Doha “does not evolve in a lopsided fashion in the post-Doha process.”

India also drew attention to the proposals by India and other members of the like-minded group on the preparatory process and conduct of the Ministerial Conference, the (counter-)proposals from a group of nine delegations, and the intentions of the General Council Chair to engage in serious consultations on them after the summer break (see the article “Doha-style democracy for WTO at Cancun?” in this issue). India said that it attached the highest priority to the resolution of  this  issue  before the next Ministerial. Only “greater transparency and predictability” would build confidence in the system and add to its credibility.

The Indian intervention, a copy of which was circulated to the media, also focussed on the TRIPS-related issues - TRIPS and public health, geographical indications, relationship with the Convention on Biological Diversity, traditional knowledge and other issues - as also some issues related to the services sector (and how to provide credit for autonomous liberalization). It said there was a need “to correct the unbalanced evolution of the package,” and developing countries should be given a “sense of greater commitment” on the part of all delegations to see that issues raised by developing countries were dealt with.

Pakistan stressed the need for members to engage themselves “with good faith and mak[e] sincere efforts” to achieve positive results, and complained there was not much movement on S&D and textiles and clothing. Various deadlines and benchmarks were set at Doha in the sequence of work, and failure to meet those deadlines and targets “would only indicate lack of seriousness and commitment” to fulfill obligations.

More dangerous, said S.I.M. Nayyar of Pakistan, would be the kind of signal that the TNC was going to send “on the lack of sensitivity” demonstrated by members on issues of interest for a large group of developing countries. There was need for “positive and meaningful engagement” on implementation-related issues - in textiles and clothing, review and operationalization of S&D - where Doha had set deadlines, but there was a lack of progress.

While S&D was not an end in itself (a point made by the US and the EC), neither was trade liberalization, which was only a means to ensuring growth and development. It was hence necessary, in the context of the Doha agenda, to remove the systemic weakness in the global trading and financing rules that constrained growth and development.

Faizel Ismail of South Africa said there were growing pressures in major economies of the world towards increased protectionism - with regressive steps already taken in steel, agriculture and textiles - that have contributed to the high levels of scepticism on the political will of rich countries to open their markets to producers of poor countries. “There is a growing perception that developed countries only pay lip service to trade liberalization, preaching benefits of free trade to developing countries whilst succumbing to protectionist lobbies in their own countries.”

Advocating actions to build confidence in the developing countries on the process, South Africa called for addressing all outstanding implementation issues, the S&D treatment questions, TRIPS and public health, and rules to reduce the protectionist usage of trade remedies. It also called for caution in extending the protection of geographical indications of origin, lest these too turn protectionist (in a reference to the EC forcing agreements on South Africa on protecting geographical origin indications for EC wines and spirits that are also produced in South Africa). (SUNS5166)                             

From Third World Economics No. 284 (1-15 July 2002)