Waiting isn’t bad, if used for better preparations

by Rubens Ricupero*

My intention is to try to call attention to those aspects that are beyond the WTO context, but which will have an important impact on the way negotiations are conducted in the WTO. Some of those aspects have to do with the world economy, some have to do with developments on a regional basis or bilateral agreements, some have to do with the WTO themselves, but they don’t belong to the negotiations; they belong elsewhere. But they are factors in the development of the WTO that perhaps explain why there is not now so much emphasis on negotiations themselves.

After Seattle, and it is still valid at this very same moment, we seem to be living through a moment of waiting. There is no real decisive event taking place in economic negotiations in general. It is not only a matter of the WTO. Some months ago there was much talk of New Financial Architecture. Now hardly anyone is really taking this matter seriously. The same could be said about investment negotiations at the OECD which have been suspended and not resumed until now. And the same applies of course to trade negotiations.

Only a few weeks ago, in an important seminar at Jackson Hole in the US, people like Alan Greenspan and Mike Moore expressed their scepticism about the possibility of a new round being launched very soon in the future. At least Mr Moore was quoted in the press that he saw the launching of new negotiations as extremely difficult.

There is some expectation that after events like the US election this may change. But is it only because of the elections or because of other reasons? Of course a part of it has to do with the uncertainty about the world economy, some of the reasons for this were mentioned here.  What is going to happen in terms of the growth of the US economy? Is there going to be a soft landing as it appears in recent weeks and months or is there still a possibility of some bad surprise in the stock exchange?

Perhaps one interesting development is what is happening now with oil prices. Because, sometimes it reminds one about the saying that people are preparing i.e. bracing themselves for the last war. That is, economists were predicting trouble in the level of interest rates in the US or the problems of stock exchange and they were suddenly surprised by some thing that no one was expecting, rise in oil prices.  Only recently we were being told that the world economy had grown much less dependent on oil and an oil shock would never be a possibility again because industry was not so central, because services and telecommunications were not so much energy intensive. All this makes sense but people just forget that we are entirely dependent on oil for transportation and there has been no diversification in this field whatsoever.

So these uncertainties go a long way to explain why there is still an attitude of waiting. It may sound that it has no direct bearing on negotiations. But they have.

To give you just one single example: take for instance the agriculture negotiations. We know that one of the basic difficulties of negotiating meaningful concessions in agriculture now is because we are in the middle of period of extremely low prices for agricultural commodities.  And so it is much more difficult for countries to accept meaningful reductions in subsidies when commodity prices are depressed. The OECD recently drew attention to the fact that the level of agricultural subsidies in OECD countries was never so high as it has been in recent years. I think the last figure is 362 billion dollars in total agricultural subsidies. And export subsidies have been increasing as well.

So here you have a direct relation between a problem that started in 1997-98, the collapse in commodity prices, in agricultural commodities and a development in the kind of support governments give to agriculture and which explain, of course, their reluctance to engage in meaningful negotiations.

So there is this clear relationship and we have to bear in mind that this will have an enormous impact on the negotiations next year and onwards. And of course, what is going to happen with regard to oil prices and commodities in general is an important factor in this respect.

But there is more to it than this uncertainty about the world economy, the US economy, the Stock Exchange, the level of interest rates, about commodity prices, oil etc.

There is the problem of developments on a regional or bilateral basis.  And this is important because sometimes I have the impression that we are putting an enormous interest in the negotiations in the WTO - for instance discussing whether there should be a link between labour standards and trade - and we forget that in many developments in the regional, bilateral basis this link is already taking shape.

For instance, the negotiations here on a multilateral level have been slow to get steam. But in this same period, where it has proved so difficult to dynamise the negotiations in the WTO, we have seen some important developments. We have seen the agreement between the European Union and the ACP countries, the Cotonou agreement, was concluded. We have seen the approval by the US Congress of the Africa Act and of course the co-related dispositions with regarding to the Caribbean. We have seen bilateral agreement with many countries, some of them not even members of the WTO - China, Cambodia sometime ago, Vietnam and others.

In several of those agreements and in some cases in laws approved by US Congress there is a clear development in relation to some of those issues that people are discussing here as if nothing was happening in other areas. And to some extent in some of those fields like labour rights important decisions are already entering into the books.

So we should be aware that something is going on in the world which is already changing the perspective.

Here one should ask the question: to what extent those developments on the regional basis, on a bilateral basis, explain why there is not so much pressure for the launching of a multilateral round. If you can get what you want on a bilateral basis why care about a multilateral round!  To what extent is there a relationship?

After Seattle, one of the remarks that was made was well, ‘it was striking to see that big business was not really putting all its force in Seattle or after Seattle’. And there were some articles arguing that at least some sectors of the big corporations were no longer looking at the multilateral trading system as their best or only hope. They were looking at a variety of what you could call a variable geometry of tools to reach their goals. So, regional and bilateral developments should receive some attention and we should not have the illusion that what is going on here at the WTO is what really counts.

And finally, about developments in the WTO itself.

Now-a-days it is frequently more important to use the dispute settlement procedure to gain market access than to use negotiations.  And this also explains why negotiations are no longer what they were 20 years ago or 50 years ago. This is happening in many instances and the same applies also in relation to the Round.

The concept of a Round that seemed so important (in the past) has lost some of its significance, particularly if you consider after the Uruguay Round ended. We already have at Singapore the ITA (Information Technology Agreement) and then the agreements here on Basic Telecom and also on banking and financial services. So it clearly showed that it is no longer absolutely indispensable to have a round in order to have significant changes on trade rules.

All these points should receive some attention, they will have a bearing on ‘Current developments in the WTO.’

My last conclusion, and this is something that I have been saying for some time, is that we are in a moment of waiting. We don’t know what is going to happen next year whether there will be a multilateral round or not. But any way we will have negotiations.

Now. waiting is not a bad thing for developing countries. It is not bad because developing countries have understandably more difficulty than others to prepare themselves when the moment of negotiations arrive. If we may have a little more of waiting time, this may prove useful. But to gain time is only meaningful if you do something with the time you are gaining, to put this time to good use. For, sooner or later, you will have to face new challenges either in MTNs or elsewhere. And therefore we have to ask ourselves how can we make the best use of the time we are gaining.

From the UNCTAD point of view, we are trying to make a modest contribution to this need to putting time to good use. And one of our efforts is this so-called Positive Agenda for future negotiations. Our book on the positive agenda and future trade negotiations is being issued and will be available in a few days more. It has a content which is very rich indeed: it will have all the discussions and consultant papers. And it will be a contribution on the part of UNCTAD to the objective of this seminar which is to improve on the perspective of developing countries.-SUNS4742

[The above is based on speech by Mr. Ricupero, Secretary-General of the UN Conference on Trade and Development, at the opening session of the Third World Network Seminar on “Current Developments in the WTO: Perspective of Developing Countries”.]

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