12:22 PM Nov 8, 1996

WTO COUNCIL APPROVES REPORTS TO SMC

Geneva 7 Nov (Chakravarthi Raghavan) -- The General Council of the World Trade Organization Thursday afternoon okayed and passed on to the Singapore Ministerial Conference (SMC) reports from various WTO bodies -- the Goods Council and committees reporting to it, the Services and TRIPs Councils, and the WTO's Dispute Settlement Body and Trade Policy Review Body.

The reports from the Council on Trade and Environment (CTE), and from the Committee on Trade and Development (CTD) were however held up.

The General Council whose meetings have been suspended is due to meet Friday evening on these questions.

During the afternoon's consideration of the various reports,developing countries expressed their concerns at the number of meetings going on simultaneously, making it very difficult for countries with small delegations to attend all of them.

But the efforts of some of them to get clarifications on the rules, to enable them to reopen in the Council reports purportedly adopted by the various subordinate bodies, "by consensus", in their absence (and often without quorum) did not get anywhere.

A number of textiles and clothing exporting countries took the floor to complain over the report of the Goods council in this area, which provides a factual survey but has no conclusions.

The EU and the US, among others, have blocked any recommendations for a commercially meaningful integration process (that the exporting countries have sought).

So far the "integration" has in fact integrated and brought under normal GATT/WTO rules only one product. All the others are products not under restraint under the old MFA regime.

Hong Kong, Pakistan, Colombia, Thailand, Costa Rica, India were among those who spoke expressing their concerns on this question and spoke of the "barren nature" of the report to Singapore in this area.

Pakistan mentioned five points which it said must figure in the declaration to be adopted at Singapore:

* The Agreement on Textiles and Clothing (ATC) to be implemented in letter and spirit;

* the later stages of integration should reflect progressivity (meaning items under restraint should be integrated in a commercially meaningful way);

* the market access issue for exporting countries should not be used to deprive them of benefits of integration;

* rules of origin should not be used to place new obstacles;

* the Textiles Monitoring Body should act in an impartial and transparent way.

The CTE met Thursday evening, and was due to meet Friday by when some of the delegations, including the USA and Mexico, who have problems with particular paragraphs of the report are to consult their capitals.

The report of the CTD was being held up as the request for observer status and participation at Singapore by the Organization for African Unity was rejected by the Council for lack of consensus.

The Council also rejected, for lack of consensus, a request from Iran to participate as an observer at the SMC.

But the Iranian request, which was on the agenda, was not formally brought up and those withholding consensus identified. The Chairman of the General Council, Alb. William Rossier of Switzerland, merely announced that prior consultations showed there was no consensus.

The WTO agreement defines consensus in terms of any member present not specifically objecting.

It is common that in the WTO bodies, prior consultations are held on any issue, and whenever the two majors (USA and EU) object or have problems, they are not formally brought up for the objectors to be identified.

But when developing nations have problems, the chairs apply pressure on them to yield, or they are dared to say 'no' in open meetings.

Meanwhile, consultations are continuing through the informal heads of delegation (HOD) process on the Ministerial declaration, with consultations scheduled for Friday among a smaller number of delegations by the WTO head, Mr.Renato Ruggiero, who has now put forward a revised draft.

The revised draft eliminates or changes the wording and context of some earlier formulations objected to in the earlier draft by the United States, but not those objected to by some developing countries.

For e.g., the US objection to the formulation (as a separate paragraph) of the WTO role in terms of "Our ultimate goal should be a world where trade flows freely among nations", is now changed into "we envisage a world where trade flows freely," and placed in the context of "pursuit of the goal of sustained growth and development for the common good."

The US, at the last HOD meeting, is reported to have objected to the concept of "trade flowing freely among nations", saying that the WTO was only concerned with trade according to the WTO rules!

The new draft still has formulations in the future work programme on trade and investment -- "begin an examination of the relationship between trade and investment leading to a report to the General Council" and in this work encouraging "close cooperation with the UNCTAD Secretariat" to make best use of available resources and ensure taking fully into account the development dimensions.

UNCTAD-IX has mandated the UNCTAD, to continue to provide a forum for intergovernmental discussions on a number of areas; and in the area of investment, has asked it to focus on "identifying and analysing implications for development of issues relevant to a multilateral framework on investment..."

Concerned that in the conflict between developing countries opposing a WTO role, but supporting the UNCTAD intergovernmental process, and the EU, Canada and Japan pushing for a WTO process, there might be an attempt by the industrial countries to eliminate any UNCTAD role, some UNCTAD secretariat members have been promoting the idea of the UNCTAD process in collaboration with the WTO.

However, the key developing countries opposing a WTO process on trade and investment are wary of such formulations, even if it comes from the UNCTAD staff (in some recent regional meetings).

The recent WTO secretariat's one-sided report arguing for a multilateral agreement on investment has made them more suspicious of the WTO secretariat and its processes.

How this will be resolved in terms of the draft declaration for Singapore is not very clear at present.

The revised draft of Ruggiero continues to call for an experts group to study the relationship between competition policies and the WTO, and any problems that may require action in the WTO framework.

The competition issue, in a very limited way, has been proposed by the EU which is opposed to embracing and making mandatory the UNCTAD negotiated voluntary code on Restrictive Business Practices (RBPs) and any consultations that developing countries may want to get the EU to go after anti-competitive behaviour of TNCs affecting trade and development of developing countries, but originating in the territories of the industrial countries. Rather the EU wants an obligation on countries to enact local competition laws that would enable the EU, and its companies, to use national legislations of countries to break open export markets and networks for themselves.

Japan has wanted the competition issue to cover a wider ground including anti-dumping actions, while Hong Kong has wanted the entire range of issues, including use of anti-dumping, rules of origin etc by the majors to protect their domestic markets, while pressing for opening markets abroad.

Both have to be satisfied with the vaguer formulation for an expert group aimed to meet the EU objectives.

The US call on government procurement is also in the revised draft for a work programme (with an group to develop an interim agreement), even though many developing countries at the last HOD process opposed it.

But the US demand on trade and labour standards is still absent in the revised draft.

And while media, and international labour unions, have tried to highlight objections as coming from developing countries (particularly Asia, including from host country Singapore), opposition to the labour standards issue at the WTO in fact come also from most of the other developing countries and many of the industrialized nations -- for e.g. within the EU, as well as Canada and Japan.

On the Trade and Environment front, the CTE report (and consensus efforts) appear to have become complicated by conflicts between the Chairman's strong personality (and push for some recommendations) and the strong views of several developing countries, who seem to have some genuine problems on formulations (favoured by the US and EU) that they fear could be used in disputes against them.

Some of these relate to the fact that a Multilateral Environment Agreement (MEA) has not been clearly defined -- whether it will have universal or near universal membership, or just some regional membership or membership from the industrial countries, without a cross-section of countries from other regions and levels of development.

These countries appear to be concerned over formulations that might seem to give a nod to MEAs and trade restrictions they may fashion or to imply that the Art XX exceptions could be stretched to allow for trade actions purporting to protect the environment, and going beyond national jurisdictions.

While there have been attempts to persuade and push them on the need to give a "message" to the environment NGOs of the North, who are agitated on these issues, these countries say they have their own environment groups who demand a different message -- including such things as IPR issues on genes and gene-manipulations and other areas felt to be affecting "sustainable development" and poverty eradication because of patent monopolies.

How to find a compromise to enable substantive work to be carried forward after Singapore, but without appearing to cold-shoulder the environmental concerns has been a difficult process, participants say.

And with not all developing countries attending the drafting groups and meetings (with some chaired by the secretariat, which is equally under pressure to get results, and not be seen as opposing the NGOs), and with some regional representatives (for country reasons) taking a lower profile, the process has been even more complicated.

At the moment, some of these active developing countries say, the language in the report is ambiguous enough to enable them to live with it -- while the CTE continues its work after Singapore under the General Council's jurisdiction.

However, they want to ensure some recognition that the recommendations are "political", rather than rule-making, and should not be allowed to be quoted against them in any dispute settlement processes as showing "subsequent conduct" of acquiescence among the parties to warrant new obligations, meanings and interpretations.