BILATERALISM OR UNILATERALISM WILL UNDERMINE WTO

1:57 PM Apr 25, 1995

BILATERALISM OR UNILATERALISM WILL UNDERMINE WTO
Geneva 25 Apr (Chakravarthi Raghavan) -- If bilateral negotiations of the US or EU or Japan with each other for further market openings is not unconditionally multilateralised, and if any of them were to act unilaterally, it will undermine the whole multilateral system under the World Trade Organization, outgoing head of the WTO Peter Sutherland warned Tuesday.

Sutherland had been asked, at a breakfast meeting with UN Correspondents, about the claims advanced when the Uruguay Round was concluded and the WTO was created about the rule-based WTO multilateral system ending to unilateralism and unilateral trade sanctions and the reality of Washington threatening other countries every year with S.301 investigations and actions, and trade diplomats of countries (from Japan to Canada) scampering around every April to ensure they are not on the hit list.

The outgoing WTO head also came out against the European/German calls for a Atlantic Free Trade area (embracing the US and EU) and said if the two were to engage in negotiations for autonomous actions by them to further reduce trade barriers and increase trade opportunities, on a multilateral MFN basis, that would be welcome.

But as far as he had seen this did not seem to be the intention.

Sutherland was also asked to comment on the recent Canadian statements about a "WTO plus" for accelerating market openings by a few, and the contradiction involved in this since it was Canada who had in 1992-1993 pushed for a WTO (at that time called a multilateral trade organization) to head off any US "GATT Plus" moves.

Sutherland said it was for the Canadian Trade Minister to explain his recent utterances, but his own discussions in Ottawa suggested that they were not envisaged an discriminatory additional structure.

"I am absolutely opposed to the creation of a global structure which provides discriminatory advantages to those who are within it in terms of trade. Regional arrangements like those of Mercosur etc, which do discriminate between members and outsiders, may not be bad since multilateral disciplines could be exercised over them. But the kind of thing some are talking about is quite another," he said.

On the US 301 threats, Sutherland noted that he had been assured by the United States several times in private meetings that it would apply and abide by multilateral disciplines of the WTO and not engage in bilateralism or apply sanctions outside the WTO and "I have no reason to believe that they would do so otherwise". In areas covered by the WTO, the rules required that the mechanisms of the multilateral process be applied if differences arose.

The US had also assured him that any agreements arising from any bilateral negotiations would be applied on a multilateral basis and the market openings secured would be available to everyone, Sutherland noted, citing the example of the US-Japan negotiations on financial services.

"But it will be useful," Sutherland said, "for this (assurance of bilateral benefits to be multilateralised) to be reiterated constantly at the highest level... Of course bilateral negotiations are understandable and correct. There is nothing wrong with them so long as the results are multilateralised..."

Sutherland was reminded that these private assurances to him was one thing, but the reality seemed to be another: US officials, the US Trade Representative and Commerce Secretary, and Congressional leaders continued to assert US right to engage in unilateral actions and representatives of various governments, whether in Washington, Geneva or the capitals seem to be running around trying to appease this global trade bully, just like the Europeans unsuccessfully did to Hitler before the War..."

Sutherland reiterated his view that the WTO was based on rules and these provided that any disputes should be brought up before the dispute settlement mechanism and adjudicated. Subsequently, WTO members were entitled to take action against those found to be contravention of the rules.

"But the system is entirely dependent on credibility and is a fragile plant that required to be nurtured and grown by giving credibility and acting in accordance with these principles... I don't think anyone is going to repudiate these principles... The WTO has to be an effective multilateral system and uphold the rights of the weak."

Earlier, asked about the process by which his successor was chosen, and regional candidacies and appointments of deputies came to the fore, Sutherland said that while finally a good choice came out of an imperfect process, it was vital that in the appointment of heads of international organizations, regional origins should not be a relevant factor, only the question of who could do the job and provide a global leadership. He did not believe in this issue the Europeans had been "innocent". it did not matter whether a candidate came from Europe, America, Latin America, Asia or any other candidate, but it should be one based on merit of the candidate and not his regional origins.

The experience in choosing his successor, he believed, would be considered by the WTO members and it was for them to decide. But he believed that there should be some preliminary bilateral and plurilateral discussions to find a suitable candidate.

On trade and labour standards, Sutherland said it was still a case of a debate about a debate and the discussions within the United States and the European Union showed that there was not even a consensus within them on this question. There were large differences on whether or not trade sanctions could be used as a mechanism for enforcement of any international labour standards, or human rights or other areas, and whether any new agenda subject on this will be possible within the WTO or somewhere else.

Clearly there was need for considerable study and discussions before any consensus can be reached.

Sutherland implied that the WTO should have research capabilities to undertake this kind of work and for discussions, but conceded that there were views that being a contractual trade organization, it should not undertake such work. But Sutherland did not believe either these and other issues could be discussed in the OECD, which was only an organization of the industrialized countries and not a universal body, and on that basis a consensus could be created.

Asked about the "intrusion" of the WTO into areas of domestic activities including culture etc, Sutherland agreed that there was a huge change, philosophically speaking, between the original GATT which began on the basis of reducing tariffs, and then moved into non-tariff areas, and the present where it dealt with services, intellectual property rights, subsidies, and various other areas.

No country or economy today was immune to these outside elements. Even for the US, the contribution of exports and foreign trade to GDP was now significant, though not as high as that of Europe and Japan.

With everyone talking of globalisation, there was need for international rules to focus on the internal mechanisms of countries -- whether it be called culture or something else.

Asked about the feelings in developing countries that they have had a raw deal out of the WTO, Sutherland said that no one was basically right or basically wrong in such complaints. The Europeans and the Americans claimed they had engaged in more market openings than others.

But it was clear that increasingly, trade and trade opportunities for developing countries, rather than aid which no doubt had its own place, was very important for development. Otherwise, they would face migrations and alienation of vast masses of people. At the same time, as the internal debates on ratification of the WTO had shown, the industrialized countries did face some problems.