Efforts for WTO supremacy over all future accords fail

The WSSD could have dealt a serious setback to the cause of sustainable development had proposed text on the WTO and corporate responsibility found their way into the Summit outcome. As it turned out, though, participants ultimately rejected attempts to accord WTO rules superior status in international law and to hinder future initiatives to promote corporate accountability.

by Martin Khor

JOHANNESBURG: The international community at the just-concluded UN-organized World Summit on Sustainable Development (WSSD) has turned back efforts to make the agreements under the World Trade Organization prevail over all future international agreements.

The attempts to make the WTO the fundamental law, casting it in stone so to speak, failed after one of the major as well as most dramatic battles fought in the WSSD negotiations, over the relationship in international law between the WTO and all existing and future international agreements and institutions.

[In international law and the accepted norms of treaty interpretation, all agreements between the same parties are interpreted as between the parties in such a manner as to be consistent as far as possible. Towards this end, some well-known principles are applied, including that the “specific” overrides the “general”, the “subsequent” overrides the “previous”, and that latter agreements and treaties (among parties) and, in some circumstances, declarations that have the effect of universally accepted norms could be used as signifying the intentions of the signatories, in so far as the meaning of earlier agreements, including that of the WTO, is ambiguous or vague.]

The issue at the WSSD was whether, when conflicts arise between WTO rules or principles and those of other organizations (especially those in the UN family), these should be resolved by examining their respective merits on an equal basis and in terms of well-known principles of international law, or whether the WTO should be given a superior status in terms of not only past agreements but all future ones too.

Concerns over WTO-consistency

This issue became the subject of heated debate inside and outside the negotiating halls on the last days of the Summit, due to the use of language in some paragraphs on the trade part of the “means of implementation” chapter of the WSSD’s draft Plan of Implementation.

In a negotiating draft on trade dated 29 August (8 pm), the chapeau to paragraph 19 read: “Continue to enhance the mutual supportiveness of trade, environment and development in a manner consistent with WTO rights and obligations, with a view to achieving sustainable development, including through actions at all levels to:....”

Below this chapeau were sub-paragraphs on four issues, including the need to reform subsidies that have negative environmental effects; cooperation on trade, environment and development between the secretariats of the WTO, UNCTAD, UNDP and UNEP; and the use of environment impact assessments to identify trade, environment and development linkages.

NGO experts on trade and environment actively lobbied various government delegations to delete the words “in a manner consistent with WTO rights and obligations” used in the draft on the ground that this would give undue preeminence to the WTO rules vis-a-vis the objectives and provisions of other agreements such as the Convention on Biological Diversity (CBD).

However, another version of what was termed the “compromise text” on trade was produced dated 31 August (6 pm) in which the words “while ensuring WTO consistency” replaced “in a manner consistent with WTO rights and obligations.” This language, retained in a subsequent draft of 1 September, would have bound the hands of countries in all future multilateral negotiations in any area, in effect giving the WTO a superior status for eternity.

It was widely believed that the “compromise text” was drafted by South African Trade Minister Alec Erwin. Initially the negotiations were limited to a small group of countries, including the EU, the G77 and China (in which Brazil, India, Venezuela, Malaysia played important roles), Australia (which strongly favoured the WTO-consistency text), the US and Norway (which opposed the term “WTO consistency”).

The key delegations were asked to take the compromise text on trade as a package and not change anything in it.

In the afternoon and night of 1 September, a growing number of NGOs actively lobbied the G77 countries and the European countries to delete the phrase “while ensuring WTO consistency.” Among the NGOs were the Third World Network, Friends of the Earth, the Norwegian Network on Environment and Development, ANPED and Greenpeace.

They argued that “ensuring WTO consistency” in any future discussions or negotiations involving the relationship between trade, environment and development would prejudice and bias the discussion towards acceptance of WTO rules. This would endanger the status of multilateral environment agreements as well as resolutions, declarations or agreements arising from other agencies such as the World Health Organization, the UN Commission on Human Rights, and conferences of the UN General Assembly itself and its bodies.

The fact that “trade, environment and development” were mentioned made it worse, as not only environment issues and proposed measures would be subjected to the WTO-consistency test, but also trade and development issues and measures (including on health, other social issues, as well as economic issues and human rights).

For instance, there is a well-known conflict between the objectives and provisions of the CBD (especially those relating to national sovereignty over biological resources, access and benefit sharing, traditional knowledge and the rights of indigenous and local communities) and the WTO’s Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). The latter mandates national treatment for patents which are compulsory for some kinds of biological resources, and whose criteria and procedures are biased towards monopoly private, corporate and institutional patent applicants and against the inter-generational, cumulative and community-based nature of local community innovations.

The contradictions between the two agreements and efforts to “harmonize” them are being discussed both at the WTO and at the CBD. Several developing countries have been trying to advocate that the contradiction be resolved by clarifying or amending the TRIPS Agreement in order to make it conform to the objectives of the CBD, but this is being resisted by some of the major developed countries that prefer the status quo or that prefer that the conflict be resolved in favour of TRIPS.

The term “while ensuring WTO consistency”, when applied to enhancing mutual supportiveness of trade, environment and development, would be a clear indication from the Summit that the WTO should be given the superior status in relation to other agencies and other agreements or declarations.

The NGOs also pointed out that the World Health Organization and its World Health Assembly had been active in support of compulsory licensing and other measures to override patents on vitally needed medicines in order to make them affordable to patients.

In recent years, the UN Commission on Human Rights had also been critical of several aspects of globalization, including the WTO agreements on intellectual property, agriculture and services. On trade and development issues, the UN Conference on Trade and Development (UNCTAD) (especially in its Trade and Development Report) had been critical of several aspects of the WTO rules and principles which handicapped developing countries.

If, in the efforts to be “mutually supportive”, the UN agencies and the multilateral environment agreements have to give way in order to ensure WTO consistency, then all the goals and measures in the environmental, trade, development, health, social and human rights arenas would have to be adjusted to fit into the WTO framework, and would become distorted in the process.

For instance, in the examples above of conflicts between different goals and agencies, the CBD, WHO and Human Rights Commission would find themselves under much greater pressure than before by developed countries to give way to the WTO, should their rules or proposed measures be seen to be “WTO-inconsistent.”

This would also lend much greater credence to the many critics of the WTO who claim that this organization is already usurping the rights of countries and of other agencies to make their own policies.

The NGOs argued that it was even more ironic and unacceptable for such a text to be adopted at a premier Summit of the United Nations itself. “It is bad enough if this were agreed to at a WTO ministerial meeting, but it would be really too much for the UN to commit suicide by adopting a declaration that depletes itself of its own powers and willingly hands it over to the WTO,” was how one NGO expressed the irony.

Negotiating positions

Whilst Australia was clearly advocating the “WTO-consistency language” (and it was believed to be backed by the US), the EU told European NGOs that they did not mind deleting the phrase but that European countries were bound by the commitment not to change anything in the text.

Norway was then about the only country that clearly opposed the phrase.

The G77 position was complex. At first, the leading developing countries in the negotiations on the trade section supported “ensuring WTO consistency” as they thought this would protect them from unilateral trade measures against the export of their products on environmental grounds.

However, it was pointed out that the WTO already had adequate rules to take care of this, and that if this was the objective, then there could have been better drafting, such as “ensuring that trade measures would not be used as a pretext for protectionism”. But a blanket use of “WTO consistency” would have a negative fallout against developing countries’ interests in other non-WTO fora.

While appreciating these arguments, some of the countries felt they should stick to the text as any proposal for a change could unravel the text of the whole section and pave the way for issues such as labour standards (which had been rejected) to be re-introduced.

About 50 NGO participants held a silent protest outside the negotiating room by holding up small posters calling for deletion of the “WTO consistency” phrase, and their strong concerns were felt.

The negotiations took place in a small, crowded room, where only Ministers and two aides each were allowed. There were unseemly and undignified scenes at the door, as security guards prevented many government delegates from entering the room, and there was much shoving and pushing as the “non-eligible” delegates tried to push their way in, while the guards pushed them back. NGOs were not allowed in, unlike on the previous days when they were allowed to observe the negotiations.

Why a bigger room could not be allocated (as on previous nights) for the negotiations was a mystery. Many government delegations and NGOs alike were angered by the apparent attempt to limit participation and compared this to the tactics and scenes at WTO ministerial meetings, most recently at Doha last year.

Late in the night, a breakthrough came in the negotiations when some Caribbean and island developing countries announced they could not accept the language “ensuring WTO consistency.” Then Dr EG Tewolde of Ethiopia gave an impassioned speech, in which he traced how at Rio 10 years ago the discussions had really focussed on biodiversity, the environment and the rights of poor countries and local communities, whereas now the narrow commercial interests of developed countries were being championed through the WTO and sought to be approved in such a high-level summit of the UN itself.

Ethiopia, he said, was a very poor country and its development was based on biodiversity and its communities’ rights over biodiversity, so he could not accept that the policies of poor countries and of the CBD and other agreements would have to be subject to “WTO consistency.”

Tewolde announced that with regret his delegation would have to break ranks with the G77 over this issue. His speech was met with loud applause, which could be heard from outside the room.

Following this lengthy and eloquent presentation, the Venezuelan Minister for Environment spoke on behalf of the G77 and said that in view of Ethiopia’s explanation, the G77 would also now like to have the phrase deleted.

The EU then also agreed to dropping the phrase, and Norway again reiterated its opposition to the phrase. The meeting’s chairman, the South African Environment Minister, then announced that the phrase “ensuring WTO consistency” would be dropped.

The final text, as approved in the final plenary of the WSSD on 4 September, appears as para 91 of the Plan of Implementation as follows: “Continue to enhance the mutual supportiveness of trade, environment and development with a view to achieving sustainable development through actions at all levels to: ...”

Below this are four sub-paragraphs on: (a) encouraging the WTO committees on trade and environment and trade and development to identify and debate the environment and development aspects of the WTO negotiations so as to benefit sustainable development; (b) supporting the Doha work programme on subsidies so as to promote sustainable development, and encourage reform of subsidies that have negative effects on environment and are incompatible with sustainable development; (c) encouraging efforts to promote cooperation on trade, environment and development between the secretariats of the WTO, UNCTAD, UNDP and UNEP and other organizations; and (d) encouraging the use of environment impact assessments as a national tool to identify trade, environment and development linkages. (SUNS5187)                                         

From Third World Economics No. 288 (1-15 September 2002)