SOUTH CONCERNED OVER NEW ISSUES AT WTO

8:04 AM Jul 15, 1996

SOUTH CONCERNED OVER NEW ISSUES AT WTO
Kuala Lumpur, 11 Jul (Martin Khor) -- Several participants at a conference here on "The WTO: Perspectives of the South" were critical of the attempts of the North to introduce new issues onto the WTO trade agenda, especially at the first WTO Ministerial Meeting in Singapore in December.

Organised by the Institute of Strategic and International Studies (Malaysia), the Conference brought together 70 trade policy-makers, diplomats, academics and business representatives from 15 developing countries to discuss issues towards the Singapore meeting.

In a session on "The New Issues and Developing Countries" on the conference's first day (9 July), Mr C. Raghavan (chief editor of the SUNS bulletin) presented a paper, following which there was a lively discussion.

Dr Vandana Shiva, director of the Research Foundation for Science, Technology and Natural Resources Policy (India), made extensive comments, as a discussant, on the issue of trade and environment.

She said that although the North was projecting itself as being the champions of the environment by bringing environmental issues into the WTO, it had in fact diluted and defanged the fora where global environmental issues were meant to be resolved, including the Biodiversity Convention and the Climate Change Convention.

There were two functions sought to be served by linking trade and environment in the WTO: to serve as a justification for unilateral trade measures; and to pacify the demands of environmentalists as well as deflect their interests and actions away from the national level by blaming the poorer countries for causing global environmental problems.

The real challenge is to bring about an appropriate governance system to protect the environment. There are three requirements for this: the appropriate venue or platform; appropriate instruments; and appropriate economic units on which to apply policies and measures.

The Northern approach to the environment is inappropriate on all three counts, said Dr Vandana.

On the issue of platform, there was first the danger that Northern proposals to amend Article 20 of GATT to extend exclusions to GATT rules to the environment and to multilateral environmental agreements (MEAs) would facilitate "green protectionism" rather than protect the environment.

Instead of taking more effective environmental measures at home, the North is likely to shift the burden to the South by use of new trade measures which it hoped to take by getting new Article XX exemptions from the GATT system.

The same country, New Zealand, that was proposing an understanding or amendment to Article XX to allow for exclusions of trade measures contained in MEAs, had at the recent Leipzig Conference on Plant Genetic Resources pleaded that there could not be some specific commitments in favour of the environment because these were against WTO rules.

On the issue of instruments, Vandana said there was a negative trend of Northern-led moves to downgrade and dismantle the use of the EIA (environmental impact assessments) and in its place to make increasing use of "environmental standards".

This, she said, is having three negative effects:

* Power over environmental issues is shifting away from governments (as environmental laws and the EIA are weakened) and towards arbitrary standard setting bodies, including for eco- labelling. This kind of standard setting is ineffective to prevent or contain the social and environmental harm caused by foreign companies, for instance in the mining and oil sectors.

* It acts against the weak parties.

* The international standards are being set by undemocratic bodies such as Codex Alimantarius and the ISO, which are generally controlled by Northern corporations that are able to influence the standards set.

Vandana warned that the simplistic setting of standards was being done with the aim of capturing markets, to create market access in the South for Northern corporations.

She suggested that in preparing for the Singapore Conference, the South should propose a positive environmental agenda that did not require new WTO trade measures.

It could make the case that unilateral instruments like the US Super 301 legislation are causing environmental destruction, and demand that a social and ecological audit be made of such unilateral measures.

The South should also raise its concerns over the negative effects of harmonised global standard setting, and propose instead a strengthened EIA process at national level.

Finally, the point should be made that if the North was really concerned about the environment, it would not push so hurriedly for a multilateral investment agreement as the MIA would accelerate deregulation, and likely weaken environmental assessment over foreign investments.

Amb. Mounir Zahran, Egypt's Ambassador to the UN and the WTO, recalled that many developing countries feared the entry of "trade and environment" in the WTO would lead to more protectionism.

However, the environmental issue was imposed on the WTO during the last phase of the Uruguay Round with the argument that those who would oppose it would bear responsibility for the Round's failure.

When a couple of developing countries intimated that they could be open to discuss the issue, though not to negotiate, this was taken up by some Northern countries and interpreted as "a consensus in emerging" and thus that the issue could enter the WTO.

Thus, when two countries make a response of openness to a study of the issue, the North claimed that a "consensus" had emerged.

Zahran said after a year of the trade and environment work programme, developing countries see several difficulties. They remain unconvinced over the Northern approach to the WTO-MEA (Multilateral Environment Agreement) relationships. They were concerned that the ecolabelling issue could be a prelude to introducing PPMs (process and production methods) into the WTO.

A Malaysian business leader raised the problem of "technology hijacking" in which transnational corporations were able to gain patents over products or processes that originated in the South, for example biological materials. Some TNCs were also selling outdated and second-hand technology in the guise of new clean technology.

On new issues, he said, developing countries should ensure that they be avoided as the stronger countries have the upper hand. For example, whilst the US blamed Southern governments for corruption, American companies were contributing heavily to both the Democratic and Republican Parties and getting favours in return.

How could there be a "level playing field" for businessmen from the South, he asked?

On competition policy, he feared that Northern countries would use this issue in the WTO to break up the domestic distribution channels that local firms had built up and legitimately enjoyed the advantage of it. "Is it wrong to expect our own distributors that we have been nurturing, to be loyal to us?" he asked.

A number of participants who were against any new issues being taken up by the WTO at this stage, followed up from the concern raised that the major trading nations could claim that a "consensus has emerged" on a new issue they proposed, even if only a few developing countries suggested they were willing to study the issue.

Taking as a guide what had happened in the services negotiations and more recently the trade and environment issue, concerns were raised that should there be agreement that an "educative process" or "study group" be established to merely discuss a new issue (or even to only exchange information, as was the case with services), this would be the start of a process with great pressures leading towards a working group and eventually negotiations for a legally-binding agreement.

Thus, there was a real danger that the agreement by even a few countries to conceptually accept a new issue into the WTO for study or discussion, could lead in the end to negotiations. Such an initial agreement could thus be tantamount to being at the start of a "slippery slope", a "creeping encroachment" or even a "journey of no return." Thus such an agreement for an educative process cannot be taken lightly.

There was an interesting discussion on whether there could be a "mini-package" of issues on trade and environment, some of interest to the North and some to the South, that could be agreed to for the Singapore meeting, or whether the Committee on Trade and Environment (CTE) should merely be asked to continue its deliberations.

Raghavan noted that the mini-package being talked about seemed to be confined to issues of interest to the North -- extending the scope of the 'exception' clause of the GATT to a blanket exemptions for MEAs and for 'eco-labelling' schemes, while issues of concern to the South like TRIPs did not seem to figure in the 'package'.

One participant said the decision in Marrakesh was only to establish the CTE and its work programme, but not that it would be a permanent feature. If the CTE's work was not proceeding well, it could be proposed that the WTO is not the right forum to discuss trade and environment and the CTE should be wound up.

A representative from an African country stressed that with so many pressing and "incredible" problems faced by the developing countries in adjusting to the Uruguay Round, it was clear that the Singapore Ministerial be a review conference. It was impossible now to talk about the new issues proposed by the North. To do so at the Singapore meeting would be like converting the WTO into a club of the rich.

In response to the questions and discussion, Raghavan said that after eight of long negotiations, the Uruguay Round finally ended with each country concluding that there was a balance of rights and obligations.

Now the Northern countries were bringing back some of the same issues which they had not succeeded in putting in the Uruguay Round accords, this time in a new jacket -- like old spoilt wine in new bottles.

"There was a balance of rights and obligations at the end of the Uruguay Round," said Raghavan. "Some of the issues of the North were rejected. If they put up the same rejected issues again, then this upsets the Uruguay Round balance. In that case, there are grounds to revisit the whole Uruguay Round package again."

For instance, added Raghavan, there could be a review again of the TRIPs agreement since many distinguished analysts had concluded that TRIPs was strongly negative for the South.

The South can rightfully argue that since the new issues upset the delicate balance attained in Uruguay Round, these new issues should not be allowed into the WTO. They can be studied in UNCTAD's Trade and Development Board. This was an appropriate and available intergovernmental forum for studying and discussing new issues.

Raghavan posed the query: if there is such an appropriate forum already, why are the Northern countries so reluctant to accept it?

"There can be a free and open discussion at UNCTAD. At the end of the process, it can be decided that if there is an issue or aspects of an issue to be taken up by the WTO, then a note can be sent to the WTO suggesting which aspects could be discussed at the WTO."

Raghavan said the Missions in Geneva had the task of safeguarding the interests of their countries. Since they were overstretched, representatives of developing countries are forced to think on their feet and to constantly react to proposals from the North.

"The developing countries can justifiably say they need more time for reflection. Since we have just finished the Uruguay Round, and there is a balance in the results, there cannot be anything new to upset this balance."

Responding to a question on labelling, Vandana said that there is a lack of faith on the seriousness of some Northern countries in their handling of labelling. There is concern that double standards will be applied.

For example, the US administration has rejected public demands that genetically engineered foods be labelled as such, so that consumers could express their own choice against such products in the market. Also, when Denmark required the labelling of genetically-engineered rape seed, the US trade official had stated that the Danes should not carry out this labelling exercise.