Global Trends by Martin Khor

Monday 1 June 2004

Hard talk at WTO symposium

At the World Trade Organisation’s public symposium last week, the European Trade Commissioner Pascal Lamy pressed his case  on agriculture and Singapore issues.  But he was contradicted by three other speakers (including a top businessman) who wanted the Singapore issues really dropped, and by participants from the floor.

It was an interesting week at the World Trade Organisation, for this normally secretive body opened its doors at Geneva for a three-day public symposium on “Multilateralism at the Crossroads.

More than 600 NGO academics, lawyers, NGO representatives and journalists joined with some of the WTO diplomats and staff to discuss a wide range of issues.

The symposium theme was quite appropriate, for the multilateral trading system got a bad name from the collapse of the WTO Ministerial conference in Cancun.  Since then, there has been an increase in intended bilateral and regional trade agreements, which has left the WTO trailing behind, as it has taken time for its talks to pick up again.

The symposium’s opening session was quite remarkable, as such sessions are usually a showpiece forum for the major developed countries or their supporters.

True to form, the European Trade Commsioner Pascal Lamy spoke concisely about the European Commission’s latest offer, made in the form of a letter sent a few weeks ago to all WTO members.

There were challenging questions from the floor to him, about what he meant on the controversial Singapore issues, and on whether his offer to a group of developing countries (called the Group of 90) was sincere or a ploy to break the unity of developing countries.

He gave his answers, and then had to leave.  It would have been more interesting if he had stayed, for three other speakers presented views that contradicted him, at least on the Singapore issues.

Indeed, the symposium participants were surprised that a majority of the panelists (including the CEO of a leading multinational company) so strongly opposed continuation of any work on at least three of the Singapore issues, in contrast to Lamy’s desire to continue having them, as far as possible, in the WTO. 

The Singapore issues  (investment, competition, transparency in government procurement and trade facilitation) were first introduced in 1996 at the WTO’s Singapore Ministerial meeting.   Developing countries are generally against starting negotiations towards new WTO treaties on these issues, but the EU is still pushing for either negotiations on new rules, or further discussions in working groups.

The opponents of the Singapore issues found an unexpected ally in the CEO and Chairman of Unilever, the giant multinational.

“Speaking for myself and the business community, I want to state unequivocally that three of the Singapore issues, investment, competition and government procurement, should be dropped,” said Niall FitzGerald, who represented the business sector at the opening panel. 

He had earlier called for the “trimming” of the WTO’s negotiating agenda and clarified that the business sector had not been pushing for the Singapore issues, adding:  “I have never found any businessman who requested it, not in investment, or competition or government procurement, although perhaps we would like better trade facilitation.”

“The EU and the US should agree to dropping the Singapore Issues altogether from the WTO as an indication they want to make multilateralism work,” said Victoria Tauli-Corpuz, Director of Tebtebba Foundation and a member and representative on the panel of the World Commission on Globalisation organized by the International Labour Organisation.

“Since the developing countries have been resisting these issues, they should now insist that they be totally dropped from the WTO, that no further work should be done on them, and they should be removed from the WTO work programme.”

Eveline Herfkens, the UN Secretary General’s executive coordinator for the Millennium Development Goals (MDGs), said the WTO should stop making new rules and instead focus on its core business, and leave other issues to other fora.

“Poor countries lack the institutional capacity to deal with new rules, which are very costly to implement,” she added. “It’s not a priority in countries to have patent offices or focus on customs valuation, when kids can’t go to schools.that create costly obligations for poorer countries.

“We should put first things first.  Trying to meet the MDGs is more important than customs valuation.”  (Her comment on customs valuation was in relation to trade facilitation, one of the Singapore issues.)

WTO director general Supachai Panitchpakdi said the WTO should not be overloaded with all kinds of issues.  He had been asked, by a participant,  to comment on the panellists’ call for the trimming of the WTO agenda, and whether the WTO should “shrink”, otherwise it would run the danger of “sinking.”

Dr. Supachai replied it was indeed an important question of whether the WTO should shrink or else it may sink.  “I think that do manage globalisation, we need rules for predictability.

“But the WTO cannot be overloaded.  If the ship is overloaded with all kinds of issues, trade related or not, we run the risk of the boat being saddled with too many burdens to cope with.”

Earlier, Pascal Lamy referred to the EC position on Singapore issues.  “We did not convince our partners on investment and competition.  We’ll have to wait for these. On trade facilitation, things are different.  I also have a glimmer of hope on transparency in government procurement though I admit there’s no enthusiasm on this.”

Lamy was asked by a participant to clarify what he meant by having a Singapore issue to be in or out, as his agreeing to “drop” an issue seemed to mean removing from multilateral negotiation but moving the process to plurilateral negotiations and agreements, or back to discussions in working groups.  These are quite different from what he meant in Cancun, which had been understood to mean dropping from all WTO work altogether.

Lamy replied:  “My take and what I wrote in my letter (to WTO members) is simple.  Trade facilitation is in the single undertaking.  Investment and competition are outside the single undertaking, and to be discussed by who and how remains to be seen.  I keep some hope for transparency in government procurement, that we can convince a bit more.”   

In his talk, Lamy made clear his offers on agriculture in his letter to WTO members were “on condition others reciprocate.”    On his “initiative for the G90”, Lamy said the G90 countries should benefit at extremely low cost, by committing only to bind a number of their tariffs and participate in trade facilitation negotiations.

“I know it’s raised questions, reservations and doubts.  Let’s take this initiative at face value, not a Machiavellian attempt to break the developing countries.  I didn’t invent the G20 or the G90 either, they invented themselves.”

To a question how he defined the G90 in his initiative, and whether it was wise or even legitimate to accord special treatment to countries on a geographical basis rather than  objective criteria, he said:  “What is the G90?  They know. I am not the inventor.  

“The proposal should cover weak and vulnerable economies, which I call the G90.  It’s not something precisely defined.”

French academic Jaques Berthlelot commented that what the EU offered in agriculture was not good to eat as it was like putting a sleeping pill and a poison pill in the food to lull people to accept.  The proposed decoupling of domestic support of the EC is not real decoupling as it does not meet the criteria set out in the agriculture agreement.  The EU’s agriculture policy reform is only window dressing and a shifting of subsidies from one box to another.

Lamy disagreed, saying that the EU’s reform was genuine “even if we don’t reach paradise yet.

In his talk, FitzGerald said denied that businessmen were pushing for the Singapore issues.  “I  have not met any businessman who requested it...Speaking for myself and for the business community, I state unequivocally, that investment, competition and government procurement should be dropped.  For trade facilitation, it’s more debatable.” 

Tauli-Corpuz in her speech, said the World Commission on Globalisation concluded that “deep divisions within the WTO over the Singapore issues contributed to the impasse in Cancun” and that “it appears unlikely that progress on these issues will be made in the WTO.”

Tauli Corpuz said that after Cancun, “Most developing countries have asserted that the WTO should stick with the EC proposal in Cancun that three of the Singapore issues be dropped from WTO.”

She agreed that there should now be a decision to clearly stop all work and discussions on the Singapore issues in the WTO, and the EU and other countries should not continue confuse members with the use of terms. 

Herfkens said the present trade rules are set by rich countries and do not take  account of poor countries’ interests.  The WTO should focus on its core business  and leave other issues to other fora.

Regarding new rules, poor countries lack institutional capacity to handle them as they are very costly.  It is not a priority in countries where kids can’t go to school, to have patent offices or better customs valuation. On trade facilitation, the real issue is lack of infrastructure in developing countries and here the rich countries should increase aid.

Guyana Minister of Foreign Trade, Clement Rohee, warned of the dangers of regional and bilateral agreements if the multilateral system did not deliver.  He said the Cancun events were not a failure but marked the increased participation of developing countries. 

“The basic issue in the WTO is whether multilateralism can temper power politics and accommodate the poor and weak.  The multilateralism of the future should be one where the WTO creates the enabling environment where developing countries can adopt various development policies and models, where development policy space for developing countries is preserved.”