Global Trends by Martin Khor

16 February 2004


The first WTO meeting of the year, held last week, did not appoint new Chairpersons for working groups dealing with the controversial Singapore issues.  This indicated that the working groups will not re-convene, at least for now, and that the issues will be put on the back burner.  But it is too early for developing countries (which have waged a battle against these issues) to cheer as the developed countries are still determined to put them back on the agenda.

Last week, the World Trade Organisation held its first meeting of the year.  What it did not do was even more significant than what it did.

After the turbulent events surrounding its failed Ministerial Conference at Cancun last September, the WTO has been trying to find back its feet.

The General Council meeting last Wednesday made a step in that direction by appointing new chairpersons for the Council itself and subsidiary bodies such as the Councils and committees dealing with goods, services, agriculture and intellectual property.

However, the Council pointedly did not select new chairpersons for the existing working groups on the so-called “Singapore Issues”:  trade and investment, trade and competition policy, and transparency in government procurement.

There is a fourth “Singapore issue” - trade facilitation - which is dealt with as a special agenda item under the Goods Council.

The implication of the WTO not selecting new chairpersons is that these working groups will not resume their work.   And that the Singapore issues - or at least some of them - will now be relegated to a “limbo world.” 

They will not be dead, but neither will they be very much alive.

This is a very important development, because most of the developing countries in the WTO have been waging a big battle to prevent the Singapore issues from being given the status of “topics for negotiations” as this would mean a commitment to set up new WTO agreements in these areas.

The Cancun talks collapsed after more than 70 developing countries, led by Malaysia and India, proclaimed they were not willing to begin negotiations on all the four Singapore issues.

The European Union, Japan, and other developed countries, with half-hearted support from the US, had insisted that the Cancun meeting launch the negotiations for the four new WTO treaties.

When the developing countries stood firm, the EU bluff was called.  European Trade Commissioner, Pascal Lamy, offered to drop two or even three of the issues from the WTO altogether, in return for negotiations to begin on one issue (trade facilitation).

Even that was unacceptable to the 90 countries in the alliance of the Africa Group, the least developed countries and the ACP (African, Carribean and Pacific) Group. They did not want negotiations on any of the issues.

After Cancun, the EU tried to pick up the pieces of the three Singapore issues that they had dropped, and this caused a great degree of confusion among the developing countries.  They thought that what had fallen, like Humpty Dumpty in the nursery rhyme, could not be put back together again.

The WTO General Council chairman tried to strike a compromise, suggesting that two issues (investment and competition) be put in cold storage, whilst an attempt be made to get negotiations going on the other two issues (government procurement and trade facilitation).

But informal consultations on this went nowhere, with the developing countries arguing that the issues should be dropped, the EU saying it would like to keep them alive in one form or another, and Japan insisting that all four issues should go for negotiations.

In mid-December, 45 developing countries tabled a formal paper in the WTO (which was presented by Malaysian Ambassador Mohammad Nor at the General Council meeting) calling for three Singapore issues to be dropped completely from the WTO.  They indicated a willingness to continue studying the implications of trade facilitation, without a commitment to start negotiating on it.

Last week’s meeting was a good indicator which way the wind would blow.

And the non-appointment of chairpersons of the working groups points to the Singapore issues being downgraded and put on the back-burner, though not killed off altogether.

After announcing the new Chairpersons for the other WTO bodies, the  General Council Chairman, Carlos Perez del Castillo, reportedly said: “You see that I have not made any suggestions for the Chairpersons of the Working Groups on the Singapore Issues.

“This is for practical reasons so as not to complicate agreement on the entire slate of Chairpersons, since delegates have no convergence on the substantive areas of these issues.”

However, he also said that “by not making the appointment of the chairpersons at this time, it is without prejudice to these working groups or to the member countries’ positions on this question.”

He then reminded the meeting what he had said on the Singapore Issues at the last General Council meeting last December. According to Castillo, work that has started on the Singapore Issues will continue.

“We will continue to explore the possibilities of an agreement of a multilateral approach to the issues of Trade Facilitation and Transparency in Government Procurement and that this work will take place in the General Council with the assistance of the Director-General and the Deputy Director General,” he said.

On the issues of investment and competition, he said:  “These consultations could also offer at the appropriate point an opportunity to take up the question of what treatment they might receive in the future.” He also clarified that these consultations would not prejudice the positions of members nor the outcomes.

From this explanation, it would appear that a fresh attempt will be made to get negotiations started on trade facilitation and government procurement, but that less energy will be put on re-igniting talks on investment and competition, at least for now.

For the developing countries that have long fought against the Singapore issues, this is a victory, or at least half a victory.

They have been against new WTO treaties in these areas for the following reasons:

·        The proposed new treaties would remove or restrict the rights of developing countries to set their own national policies on foreign investment, competition, government procurement and trade facilitation, and this would adversely affect economic development as well as social stability.

·        It would also be very costly to implement such treaties and developing countries do not have the resources.

·        At least three of the issues are not on trade and it is inappropriate to locate treaties on them in a trade organization.

·        There are many unresolved trade issues in the WTO, such as agriculture, industrial products and intellectual property and the limited time available should be focused on these and not diverted to negotiating new and complex issues.

Developing countries should however not let their guard down by this half-victory and certainly it is too early to cheer.

The developed countries have been trying for two decades now to get a global investment regime established so that their big corporations would be able to operate as they wish in any country of their choice.  They also tried for many years to get the other three issues on the WTO agenda.

They will not give up.  After the setback, which they consider temporary, they will try again to get all the issues to creep back onto the negotiating table.

Humpty Dumpty may not be put together again, but the European Commission (backed by Japan and others) can be expected to try to pick the pieces up and get the Singapore issues on the road again.

As the outgoing Council chairman indicated at last week’s WTO meeting, the new Chairman (Ambassador Shotaro Oshima of Japan) and the WTO Director General will try to move two issues to the negotiating stage, whilst keeping the other two issues on a low-key note for possible re-awakening in future.

The developing countries should thus be on their guard and keep defending their turf, and who knows, they may succeed one day in getting the issues off altogether.

Last week’s meeting also could not decide when the next Ministerial Conference (which will be in Hong Kong) should be held.

It was expected to take place only next year.  But the US and EU are known to want a meeting this year.  It is widely believed the main reason is that the EC Trade Commisoner Pascal Lamy and the US Trade Representative Zoellick will be retiring by the end of 2004, and they want to leave on a high note rather than be remembered for being part of the failure in Cancun.

Countries in favour of a meeting this year , such as the US, Canada, Morocco, Singapore, Thailand and others felt that fixing a date now for the next Ministerial meeting would put pressure for the negotiations to produce quick results.

Other countries, including China, Jamaica and Cuba, said it was premature to set a date now since negotiations have not re-started and it was  hard  to  gauge whether there would be sufficient progress to justify a ministerial conference.

In any case, Hong Kong said it would need at least ten months’ notice to prepare for the conference, thus indicating that there would not be one this year, at least not in Hong Kong, since the meeting ended without a decision.

Now that the chairpersons are in place (excepting for the working groups on Singapore issues), negotiations at the WTO are expected to begin again in March.