NEED FOR POLITICAL APPROACH TO WTO IMPLEMENTATION

10:35 AM Jul 19, 1996

NEED FOR POLITICAL APPROACH TO WTO IMPLEMENTATION
Geneva 18 Jul (TWN) -- The review of the implementation of the Uruguay Round agreements at the Singapore Ministerial Conference (SMC) of the World Trade Organization should not be approached in a mechanistic and technical way, but as a political process to assess the impact on the developing countries, in particular the least developed, and the winners and losers so as to compensate the losers.

This was a strong and consensual view theme that emerged at the Conference on "The World Trade Organization: Perspectives from the South", organized by the Malaysian Institute of Strategic and International Studies (ISIS) held at Kuala Lumpur (July 9-10).

The WTO agreements should ensure that equity is ensured through the trading system and its rules and the operation of international trade.

The implementation issue was the focus of one session of the two-day conference, but was also a constant theme running through other sessions devoted to new issues, the investment issue and the GATS built-in agenda.

Egyptian Ambassador, Mr. Mounir Zahran, in a paper presented to the Conference, said that while the successful conclusion of the Uruguay Round and establishment of the WTO, at Marrakesh, had ushered in a new era of international trade and economic relations, many developing countries including Egypt were still grappling with the implementation of provisions of various agreements. While still striving to implement the necessary laws and policies and establish the institutional setups, "we are yet to fully comprehend the impact of these agreements on our economies."

Many of the agreements, he noted, provided for regular reviews of their operation, and special review of work programmes to introduce improvements or verify implementation.

The implementation requirements included those for technical assistance to developing countries to enable them to fulfil their obligations but also maximise benefits that could be derived. There were also issues concerning notification requirements that all members have to fulfil. The technical assistance programmes of the WTO could not remain limited within the previous levels of financial and human resources of the old GATT, but WTO must have adequate resources for the new demands.

There was also need for synergy and full cooperation and division of labour among UNCTAD, WTO and the ITC jointly run by them. In technical assistance there was an overemphasis on seminar. More resources should be allocated to other modes of delivery, including highly specialized advisory missions.

The WTO technical assistance must include assistance in the implementation progress, in setting and presenting the cases of developing countries to the Dispute Settlement Body (DSB), and how developing countries could benefit most by utilising fully the transitional periods available to them.

The notification requirements meant that some 175 notifications were involved on trade in goods, another 40 for the GATS and TRIPs agreements. This was a heavy burden for developing countries, and the response rate in notifications was below one-quarter, Zahran said. Apart from the sheer number, there were also difficulties about quality and completeness of content of notifications, and comparability and how best to ensure multilateral scrutiny and monitoring of notifications of the developed countries.

Despite the promises of the Round about increased market access for developing countries, who have made great efforts at liberalising their own economies and making substantial concessions, the exports of developing countries faced numerous tariff and non-tariff impediments, tariff escalations and tariff peaks in socalled 'sensitive sectors' -- mostly sectors of export interest to the developing countries, such as textiles and clothing, leather products, agricultural products and agro-industry products. Several provisions of the rules have been used to limit meaningful access to markets for developing countries and these impediments included use of anti-dumping rules, grey area measures, quota regimes, etc. There were some 808 antidumping measures in force in June 1995, and the major Industrial Nations seemed better placed to use these tools to protect their markets.

The functioning of the Textiles and Clothing Agreement and the Textiles Monitoring Body under it remains a major issue for many developing countries who have tabled this issue for review at Singapore, Zahran said.

Outlining the shortcomings in other agreements, including the way the movement of natural persons for delivery of services had been dealt with, in terms of offers and commitments from the developed countries and the many visa and other limitations, Zahran said the expectations of the developing world had largely not been met.

Referring also to the issue of net-food importing countries (NFICs) and the agricultural accord, Zahran recalled, that the conclusion of the Uruguay Round became possible only on the basis of the Marrakesh Ministerial Declaration on the NFICs, who, according to the FAO, would be spending some three billion dollars more on cereal imports in 1995/96 than in 1994/95. The implementation of the Marrakesh declaration and decision however had not progressed because of the arguments about how much of the acknowledged rise in food import bills were due to the Agriculture agreement, and how much due to weather conditions and causes.

Referring to the dispute settlement system, widely acknowledged as one of the main benefits of the system, Zahran said it was too early to draw definite conclusions on the functioning of the WTO dispute settlement system, and the real test would come in terms of how the majors would implement the rulings. While the US has indicated, in the case relating to the gasoline imports, its willingness to abide by the ruing, it has not so far presented any time-frame.

"The initial years of a new organization's life," Zahran said, "were crucial to its future credibility and effectiveness. That is why we are weary of the attempts being made to overload the WTO agenda with new issues. We believe that this would overstretch the available staff and resources of the WTO at a time when we need to consolidate it."

Several officials from developing countries who participated in the lively discussion underlined the difficulties of the developing country negotiators in Geneva.

A number of them noted that while there was a process of globalization, a large number of developing countries were unable to participate in the process or take advantage, and the WTO process was not helping them.

Mr. Chakravarthi Raghavan, Chief Editor of the South-North Development Monitor, said the impact of the Uruguay Round had to be judged in terms of the promises made at Punta del Este, the claims made in 1992, 1993 by institutions like the World Bank about the $250 billion welfare gains, and the GATT secretariat's own claims in December 1994 about a $500 billion gain, and some more recent, but unpublicised assessments that the gains could be as low as 40-50 billion. All such econometric modelling figures were based on many assumptions, often spelt out only in fine print in footnotes, but nevertheless were used to hustle developing countries to accept the accords.

Most of the Third World delegations in December 1993 had also spoken about the gains to them of the rule-based system and the trade security and the fact that unilateral actions by the United States as through S.301 would be illegal. But in the one year and more of its operation, the rule-based WTO system had not enhanced trade security. The US continues to threaten unilateral actions against countries, publish officially or unofficially lists of goods of countries which it would hit for trade sanctions. Whether or not ultimately these measures are taken, the countries concerned and traders have been engulfed in trade insecurity.

The WTO Director-General at Midrand, UNCTAD-IX had frankly said that it was not the business of the WTO to ensure the equitable distribution of the gains of the WTO system, and that it could only reward the competitive producers. Apart from this flying in the face of the objectives of the WTO, this meant that either the WTO members at Singapore address this equity question and see how the rules could be changed to ensure equity or face growing opposition from social sectors of their countries.

Mr. Martin Khor of the Third World Network said that trade, or trade liberalisation and integration of countries into the world economy or trading system, were not ends in themselves. The objective was welfare gains for the people. It could not assumed that trade liberalisation and integration would bring benefits to everyone. At UNCTAD-IX many nations had taken the floor to outline how they were being marginalised, and this was the primary issue to be addressed through the review of implementation.

A former Indian representative to the GATT, and former head of UNCTAD's trade division, Mr. Bhagirath Lal Das said that while cooperation between WTO and UNCTAD in technical assistance should be most welcome, and UNCTAD should take full advantage of the fund of information available at the WTO, this should not detract from the weakness or unwillingness of the WTO to undertake analysis. The secretariat had to administer the implementation of a contractual agreements, and this imposed limitations on them. In its efforts to cooperate with WTO, UNCTAD should not allow itself to be constrained.

There was a lot of responsibility left on Geneva negotiators, and most delegations were poorly staffed. But they had to defend their country interests, not to win plaudits from others, and from his own experience he could say that diplomatic courtesies were of no avail, only blunt, but polite language, was needed.

As for the gains and losses, any modelling system had limitations, and the results depended on what was fed into it. But a clear assessment, a qualitative assessment was essential. This could be done only by UNCTAD as well as NGOs.

The new Dispute settlement system, Das said, had overcome some of the weaknesses of the earlier GATT system. From raising the dispute to the final ruling there was an automatic and time-bound process. But this had only put off the problems to the implementation stage and in the final analysis the countries winning a ruling could only implement through trade retaliation. This was difficult enough for majors, but very difficult for small trading partners. Unless the WTO system introduced a system of collective sanctions to enforce rights of the developing countries, the system would remain asymmetric, he said.

While the GATT's Part IV, for special and preferential treatment for developing countries was on a best endeavour basis, and the Uruguay Round had eroded these, there were some provisions that could be used. In particular, Art XXXVII, he said, that Contracting Parties acting jointly and collectively could hold consultations and make recommendations where the provisions were not being carried out, even in terms of best endeavour. These could and should be pursued.

Other speakers noted that several of the measures favouring developing countries, and the least developed in particular, were couched in enabling language like "should" or "could" or "taking into consideration" etc, while obligations were all in "shall".

One participant said that developing countries should propose a Ministerial decision for an agreed interpretation at Singapore that in all such provisions favouring developing countries, the "should" must be interpreted as "shall", and this should be the advance price paid before any new issue is brought up for even discussion.