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TWN Info
Service on WTO and Trade Issues (Oct20/04) Washington DC, 6 Oct (D. Ravi Kanth) – Despite attempts by the US and other developed countries to pursue overly non-market-oriented policies, the US, Brazil and Japan have stepped up their campaign at the World Trade Organization on the controversial issue of promoting “market-oriented policies”, trade diplomats told the SUNS. In their revised proposal (WT/GC/W/803/Rev.1) submitted to the WTO’s General Council on 2 October, the three countries highlighted the importance of market-oriented conditions to the world trading system. The US together with Brazil and Japan, the two new signatories to the US proposal, insisted that the World Trade Organization was established to promote Member economies’ participation in a world trading system “based on open, market-oriented policies and the commitments set out in the Uruguay Round Agreements and Decisions.” The three countries recalled “that the establishment of the WTO reflected Members’ desire to operate in a fairer and more open multilateral trading system for the benefit and welfare of their peoples”. They claimed that during the period of time during which the Uruguay Round was being negotiated, “significant measures of economic reform and autonomous trade liberalization were implemented in many developing countries and formerly centrally planned economies.” Brazil, which led the G20 developing country coalition for negotiating the developmental reforms in the Doha agriculture negotiations, has now changed its positions so radically that it appears to be beyond comprehension as to how it could join forces with the developed countries to promote market-oriented policies, said a trade analyst, who asked not to be quoted. In their proposal, the three countries expressed “serious concerns with non-market-oriented policies and practices that have resulted in damage to the world trading system and lead to severe overcapacity, create unfair competitive conditions, hinder the development and use of innovative technologies, and undermine the proper functioning of international trade.” According to recent media reports, the US Trade Representative (USTR) Ambassador Robert Lighthizer has signaled several times that Washington will implement strategic re-shoring policies to ensure that vital products are manufactured in the US following the COVID-19 pandemic. In the run-up to the recent G20 trade ministers’ virtual meeting, China firmly opposed calls for market-oriented conditions, saying that countries have to abide by their commitments as per the WTO agreements in different areas, said a G20 participant who asked not to be quoted. Against this backdrop, Brazil, Japan, and the US affirmed that “market-oriented conditions are fundamental to a free, fair, and mutually advantageous world trading system, to ensure a level playing field for Members’ enterprises for the benefit of their citizens.” The three countries said that they recognize “the importance of a Member’s right and ability to regulate in the public’s interest, promoting the public’s welfare and helping to establish a level playing field for all market participants.” Further, the three members affirmed that “Members’ enterprises should operate under market-oriented conditions” and noted that “the following elements indicate and are important so that market-oriented conditions exist for market participants”: 1. Decisions of enterprises on prices, costs, inputs, purchases, and sales are freely determined and made in response to market signals; 2. Decisions of enterprises on investments are freely determined and made in response to market signals; 3. Prices of capital, labor, technology, and other factors are market-determined; 4. Capital allocation decisions of/or affecting enterprises are freely determined and made in response to market signals; 5. Enterprises are subject to internationally recognized accounting standards, including independent accounting; 6. Enterprises are subject to market-oriented and effective corporation law, bankruptcy law, competition law, and private property law, and may enforce their rights through impartial legal processes, such as an independent judicial system; 7. Enterprises are able to freely access relevant information on which to base their business decisions; and 8. There is no significant government interference in enterprise business decisions described above. Further, they spoke about their willingness to work with “WTO Members in order to strengthen our collective commitment to open, market-oriented policies in order to achieve market-oriented conditions that are critical to ensure a level playing field and a fairer and more open world trading system that benefits our peoples.” During a webinar meeting last month on WTO reforms convened by Prof Abhijit Das of the New Delhi-based Centre For WTO Studies, the South Centre, and the Third World Network, South Africa’s trade envoy Ambassador Xolelwa Mlumbi-Peter criticized the US proposal on pursuing market-oriented conditions at a time when the development divide continues to widen among developing and least-developed countries, including the worsening of inequality and poverty. She said that COVID-19 “has actually further highlighted the implications of the development divide.” More disturbingly, the call for promoting market-oriented conditions has come close on the heels of the refusal by the US and other developed countries to negotiate on the mandated special and differential treatment (S&DT) proposals as entailed in the G90 proposal. At the webinar meeting, the South African trade envoy said that “market is not perfect and there are cases of over-pricing, market concentration, rising unemployment and inequality, necessitating Government intervention to ensure functioning of the market and to promote a range of public policy outcomes.” “Almost all WTO members have mixed economies where Governments intervene in the economy to achieve the developmental mandate,” she argued. Moreover, “we need a multilateral trading system that supports inclusive growth, and enables national authorities to pursue steps to achieve national developmental objectives and outcomes based on their peculiar circumstances,” Ambassador Xolelwa told the participants at the webinar meeting.
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