MTO WON'T HAMPER ENVIRONMENT, SAYS EC

Mar 11, 1993

MTO WON'T HAMPER ENVIRONMENT, SAYS EC

Geneva 9 March (Chakravarthi Raghavan) -- The European Community has sought to rebut criticisms of leading non-governmental organizations against the proposal to create a Multilateral Trade Organization (MTO) as part of the Uruguay Round agreements.

The EC's view in a letter by the EC Commission Ambassador to GATT, Tran Van-Thinh to the World Wide Fund for Nature (WWF), was in response to a memorandum sent by the WWF to the "core group" of the Uruguay Round participants negotiating the proposed MTO.

Tran sought to repudiate the view that the proposed MTO would be against the interests of the developing countries and said: "That the MTO is unpopular in some industrialized countries, notably in the United States of America, is one more indication that it will benefit developing countries."

Rejecting the view that the Uruguay Round agreements would hamper environment protection, Amb. Tran Van-Thinh said there was no simple correlation between economic growth and protection of environment and the Uruguay Round agreements would not prevent governments from protecting the environment.

"To restrict trade is not the best method. The general principle in the Uruguay Round agreements is that measures to restrict trade should be taken only when this is necessary to achieve a legitimate objective (such as protection of the environment. Governments must, however, take care to ensure that environmental concerns do not become a cover or justification for base protectionist interests.

"Similarly, governments of large countries should be prevented from using the leverage of their markets to force smaller and/or developing countries to adopt unilaterally defined standards of behaviour. Precisely to ensure that decisions are taken democratically, contractual rules negotiated between participants must prevail over the unilaterally imposed standards of the mighty."

While Tran's views on environment and trade is probably widely shared by the large number of developing countries, he appeared to be on much weaker ground in rebutting the view about lack of democracy in the GATT, Uruguay Round and proposed MTO by saying "In the international arena the only realistic meaning of democracy is that views of all governments are taken into account."

The WWF memorandum (which had enclosed a joint statement of about 150 environment and development NGOs of the North and the South drawn up at a meeting in Hamburg in November), had criticised the MTO move as beyond the formal mandate for the negotiations and evolved without "virtually no public scrutiny or public debate".

In their statement, the NGOs had said that while there might be good reasons for a multilateral rule-based trade and economic regime, "neither the GATT nor the MTO should be the seat of such a body."

The MTO, they had said, would not be open nor transparent nor accountable to those who live under its rules and would not give an equal voice to developing countries while its "narrow commercial approach" would render it unable to take account of development needs and environmental concerns.

The WWF had also contended that the MTO, and its rules and powers, would seriously jeopardise the efforts of individual countries to secure sustainable development and environmental security.

The joint NGO statement, besides raising some environment and sustainable development questions, had also been critical of the proposals under MTO for "cross-sectoral retaliation" and forcing the developing countries to compulsorily liberalize trade and investments in goods and services and force all countries to have intellectual property laws that hamper technology transfer.

Those not following these rules could have high duties or bans imposed on their exported goods, and developing countries would be forced to adopt national economic and social policies that weaken their domestic economic sectors, their ability to sustainably manage their natural resources and restrict their local technological development.

The Uruguay Round Trips agreement, the NGOs had said, would force patenting of life-forms and stimulate expansion of environmentally hazardous biotechnological industry.

The Trims agreement, the NGOs had further said, would severely reduce the capacity of governments to impose conditions on foreign companies and reduce multilateral or national controls over big companies and enable latter to increase their control and monopoly of markets without responsibility to meet national or international obligations.

The WWF memorandum had also criticised the "undemocratic, secretive and inequitable nature" of the (Uruguay Round/GATT) process to create it and suggested that instead that an international trade body should be set up under the UN General Assembly.

The WWF had also said that all the NGOs would continue to campaign against the MTO so long as it remained integral part of the Uruguay Round package.

In refuting the charge of lack of 'democracy', the EC delegate has sought to give a definition of democracy at international level different from what the North asks Third World countries to do domestically.

"In the international arena the only realistic meaning of democracy is that the views of all governments are taken into account", Tran said in his response.

"It is because participating countries believe that the world's affairs should be dealt with democratically that they support the GATT and the Uruguay Round, the results of which will have to be adopted by consensus among the participants," he said without going into the question of how the actual negotiations in the GATT are conducted.

"Before these results are put into effect each government must complete its own national procedures...The MTO offers an institutional framework for administering the contractual trade relations between its members in a transparent manner. When decisions have to be taken, each member's view will be fully taken into account through a well-established practice of consensus.

"The dispute settlement system will ensure that all governments honour the commitments they have taken. It is precisely the smaller and weaker countries which will benefit most from the MTO's democratic procedures which are different from those of the UN system. In the United Nations direction is provided by the Security Council, where decisions are taken by a selected few. Nor do financial institutions which have voting arrangements giving more weight to the large wealthy countries measure up to the democratic principles inherent in the MTO's procedures".

In comparing the MTO procedures to that of the Security Council or the IFIs, the EC statement ignored the other decision-making processes of the UN system -- the General Assembly and other specialized agencies and the one-state-one-vote principle.

At an international convention on the Dunkel texts at New Delhi last month, the former Indian representative to the GATT and former Finance Secretary to the Government of India, Shrirang P Shukla had said "Multilateral structures," Shukla had said (in relation to the GATT processes) "were now opaque and governments were evasive and unresponsive when pressed by the public to explain their positions in the negotiations".

Tran said in his reply to the WWF that the idea that governments of sovereign states were ready to accept the creation of a powerful worldwide supranational body was not credible to anyone familiar with the present state of international relations.

"The MTO would be an instrument of intergovernmental cooperation which its members would accept if they consider it is in their own self-interest to do so. The aim of the new organization, and the aim of the GATT out of which it developed, is to base countries' trade relations on internationally agreed rules and not on the law of the jungle which would prevail in the absence of international agreement. In this respect, the MTO will have no more powers than the present GATT. The GATT has always been a temporary arrangement. The MTO only completes what was foreseen at the outset in 1947."

On the NGO concerns over Trips, Trims, Services etc, Tran's reply said: "The main aim behind the MTO is that governments should arrange their affairs multilaterally, not bilaterally. By accepting the Uruguay Round results governments would collectively agree to improve the present GATT rules and to extend the benefits of a rule-based approach to new areas (Trips, Services).

"Members of the MTO would also agree to strengthen existing dispute settlement procedures in order to ensure a that both the strong and the weak comply with negotiated rules. Only a multilateral system can provide developing countries with this essential safeguard."