12:04 PM Dec 14, 1995

ROCKS AHEAD FOR WTO JOURNEY TO SINGAPORE

Geneva 13 Dec (Chakravarthi Raghavan) -- If WTO head Renato Ruggiero and most developing and some developed countries hoped for a 'non-confrontational' first ministerial meeting at Singapore, the year-end meeting of the General Council of the World Trade Organization leave little room for doubt that issues of investment rules, trade and labour standards, and corruption in business and contracts would be joined at Singapore and short of acquiesence developing countries face more demands on them..

The speeches of the major entities at the General Council show that while the Americans and Europeans may have negotiated a 'trade peace' as part of their agricultural accord to conclude the Round, all the bon homie shown by developed and developing countries at Marrakesh, have evaporated in the 16 months since then, and the WTO is emerging as the principal battleground for neo-mercantalist demands of the majors.

The US position on the new agenda was spelt out at the WTO General Council Wednesday when the membership of the WTO got an opportunity to review the functioning of the organization in its first year and look at the road ahead in terms of implementing the Uruguay Round and the new agenda. The Deputy USTR, Jeffrey Lang made clear that US wants the WTO to address "the corruption" issue which he said was now the biggest non-tariff barrier to trade, and the trade and labour standards issue.

The rosy view of achievements projected by WTO Director-General (in a report to the Council) on the outcome of the Round and its implementation, and by major trading entities and the Bretton Woods institutions about the WTO and its functioning, and the increased market access for developing countries by the 'liberalisation' under Uruguay Round accords was also sharply questioned by some leading developing countries.

Hong Kong, Pakistan and India (in that order) were among those who spoke, sharply raising questions about the actual functioning of the WTO in the first year, and more particularly the implementation of the Agreement on Textiles and Clothing and its overseeing body, the Textile Monitoring Body (TMB) and its processes and recommendations which did not enlighten the members and the parties involved in its hearings about the reasonings for the TMB decision or what exactly its recommendations were.

Ruggiero in his opening speech had called for a 'non-confrontational agenda' for the WTO's first ministerial meeting in Singapore -- and this had been generally interpreted to mean caution against raising trade and labour standards issue.

But the United States promptly raised not only this issue, insisting that a link had in fact been established (contradicting Ruggiero's views), but also called for the Singapore meet to start work on considering "corruption" which the US viewed as the single largest non-tariff barrier.

The US view that WTO had to address the labour issue has received backing of sorts this year at the Quad meetings (of Canada, US, EU and Japan), by the EU's Trade Commissioner Leon Brittan at the recent Stockholm meeting of a few countries, and in remarks outside by several others including Ruggiero himself who seemed to favour some discussions at the WTO.

Japan and Switzerland were among others from the industrialized world who also brought up the investment issue and need for WTO rules on investment.

Some trade diplomats sought to soften the impact of the US position, by hinting that it is all related to the 1996 US elections. But so had they done in the past before, during and after the Uruguay Round, and with the US always extracting some concessions from them to "quiet" Congressional pressures.

The speeches of India and others questioned the optimistic views of the majors, and also what Ruggiero had said and left unsaid (both on the working of the WTO and implementation of the Uruguay Round agreements).

The WTO General Council which held a general, an overview debate, was adjourned Wednesday evening to meet Friday morning to enable seven remaining speakers on list so far to speak.

No meeting was scheduled for Thursday: the generality of the membership and the official business had to give way to the convenience of the US a United States which had organized private consultations, at the level of representatives from capitals, and looking towards a future work programme and agenda -- a case of collectivity of the members yielding to the powerful.

The deputy USTR, Jeffrey Lang, one of the first speakers in the discussion staked out what the US wants done at Singapore and looking beyond.

In terms of the WTO and its agreements and system, he said regional agreements were gaining in popularity and WTO should provide a solid foundation for going further. The US had "profound reservations" on agreements inconsistent with the WTO, but did not feel regional agreements should be feared. WTO could meet the challenge if it continued to offer all its members something of tangible value.

The US, like the EU, later regretted that it had not been possible so far to define WTO's relations with NGOs or lift the "unhelpful veil of secrecy" on WTO's day-to-day activities by derestricting panel reports.

While there is general agreement on this, there has been some disagreement over whether panel reports should be published immediately on issue, after adoption at the DSB, and or whether publication could be held up at the instance of both parties to a dispute or at instance of either. Also involved is questions about the Textile Monitoring Body TMB), which is a part of the dispute settlement process, with both its recommendations and reasoning made public. The major textile importing countries have been averse to this.

But neither the US, nor the EU, in their speeches adverted to what worries the generality of the WTO members: how to first bring about transparency within the WTO which is now severely impaired by a few powerful entities meeting among themselves elsewhere, reaching decisions, which are then presented to others for mere endorsement.

The US also complained about inability so far to agree on an ethical code of conduct.

The consultations on this, during the WTO preparatory committee stage, and since then, have in fact evolved such rules which would apply to dispute settlement panel members, arbitrators, members of the appellate body, and the secretariat staff. But it got stuck over the view of many developing countries that it should apply in an appropriate way to the membership of the Textile Monitoring Body. Here again the importing countries had been reluctant, though there has been some talk recently of a solution with importing countries reportedly reexamining their positions.

In terms of 'unfinished business', Lang focused on meaningful outcome for the negotiations on basic telecommunications and that only liberalization and private competition providing the most direct route to universal service. Without liberalisation, he warned, WTO members would be left without access to this technology and thus have to postpone their development and universal basic service.

But Lang made no reference to the other 'unfinished' services negotiations -- liberalisation of maritime services.

Lang also called for full attention to the environment/trade relationship and need for the Committee on Trade and Environment (CTE) to produce concrete results for the Sinagpore meeting.

Looking beyond Singapore, he spoke (without elaborating) of the "new challenges", particularly in the area of TRIPs where "many members will find it difficult to comply with substantive obligations of the Agreement", and called for careful preparation for the Singapore meeting, avoid setting unreasonable expectations, but spoke of what he saw as the "consensus emerging" on priority for Singapore. He spoke of implementation of the Uruguay Round agreements and of the WTO, with its built-in agenda and as an ongoing negotiating forum.

He then mentioned as further agenda and for a work programme (to be agreed at Singapore), the issue of corruption as the "single greatest non-tariff barrier" and the interaction of trade and labour standards, insisting that such an interaction did exist and WTO should discuss this without risking establishing an excuse for protection.

The EU's speech was slightly muted, but said that the movement towards an open trading system had to be accompanied by very difficult adjustments and policy-makers had to explain all the time to their public opinion that this trend was favourable in the long run, and that the level of unemployment, still remaining at unacceptable levels, would not be diminished by protectionist actions.

[But an EU statement Thursday, welcoming the UNCTAD World Investment Report and its advocacy of international discussions on market access encompassing investments, called for an informal WTO working group for discussions on investment rules.] The EU however stressed the need for all trade differences to be taken to the WTO and its dispute settlement processes without the threat or imposition of unilateral sanctions. The EU also called for confidence in the system being built through transparency and general respect for rights and obligations of everyone.

While Switzerland said the Singapore agenda should include investment and competition policy issues, Japan said that before taking up new issues with too much haste, the built-in agenda must be addressed.

Japan's Amb. Endo called for continuing the work in the CTE on relationship between Multilateral Environment Agreements (MEAs) and the Multilateral Trading System as well as ensuring transparency. He also welcomed the move to set up a single standing committee to deal with all regional trading arrangements.

On the Trade and Investment issue, he said the WTO should address the problem of how to work global investment rules under WTO, taking into account progress made on a Multilateral Agreement on Investment (MAI) at the OECD. The Trade and Competition issue, he said, should address all aspects of the question including the exclusion of arbitrary use of trade-related measures such as anti-dumping.

As for labour standards, he added, "careful consideration should be given in picking the matters to be discussed within the context of the WTO."