Apr 28, 1998

NORTH-SOUTH DIFFERENCES OVER MINISTERIAL DECLARATION

Geneva, 26 Apr (Chakravarthi Raghavan) -- Informal consultations at the World Trade Organization on a draft ministerial text to be adopted at the Second Ministerial meeting in May has shown some sharp differences on a preparatory process for decisions at the Third Ministerial meeting in 1999.

These differences relate to attempts to focus a preparatory process leading to decision-making on the so-called built-in agenda and implementation issues, but also whether "a more comprehensive agenda" could be envisaged, taking account of the work undertaken at Ministerial decisions of Marrakesh and Singapore.

As worded, the decisions of Singapore, could not merely include some of the new issues proposed - investment, competition policy - on which study groups are at work -- but also others where the ministers pronounced themselves such as on "trade and environment" and "labour standards".

The differences in particular arise over whether the work programme to be taken on hand in the General Council to prepare for the Third Ministerial should be mandated to the issues of implementation and built-in agenda of the WTO or should also include the "decisions" at Singapore Ministerial, and whether a "more comprehensive" agenda (meaning the new issues that the EC, US and others have proposed) should also be taken on board.

The US administration has made clear in Washington and elsewhere that it wants to raise the issues relating to environment and labour standards, and keep the WTO pot boiling on them.

At the Singapore Ministerial meeting in December 1996, study groups were established on the subjects of 'trade and investment', 'trade and competition policy'. The General Council was instructed after two years, i.e. after December 1998, how the work of each of these study groups are to proceed.

It was also explicitly made clear at Singapore, that future negotiations if any regarding multilateral disciplines in these areas would take place "only after an explicit consensus decision" among WTO members regarding such negotiations.

The EC, Canada and some others are trying to get some indirect endorsement from the May ministerial for negotiations on investment and competition policy questions.

The developing countries, atleast a large number of them, frustrated that their concerns over the problems arising out of implementation of the WTO agreements concluded at Marrakesh, got short shrift at Singapore, are concerned that a similar fate would overtake them now. 

Their apprehensions have a basis in the 50-year history of the multilateral trading system (on which the proposed declaration seeks to put a high embellishment on its achievements).

At every point in that history, and at every round of negotiations since late 1950s (when they began to emerge as competitive suppliers), developing countries either found their problems sidelined, taken note of on a "best endeavour basis" (special and differential treatment and Part IV of GATT) or new restrictions put on them (the succession of special accords on trade in textiles and clothing as 'authorized departures' from GATT rules, and other voluntary export restraints etc).

During the old GATT, these came during every round of negotiations. Now they seem destined to turn up at every ministerial, and the 2^nd Ministerial meet at Geneva will be no exception.

As one Third World trade expert with long experience in the trade negotiations area put it, it seems that every WTO ministerial will now have to establish a 'milestone' for the developed countries to push into developing countries, and create a 'millstone' around the neck of the developing world - whether in the form of trade restrictions and regulations or forcing their countries to forego revenue sources.

Both the processes for the Ministerial meeting in May, and the further work through a ministerial declaration (being handled through an informal consultations under the WTO head, Mr. Renato Ruggiero) suggest that this may well be their fate once again.

While the major trading nations, bilaterally and plurilaterally (through meetings of the so-called Quad -- Canada, EC, Japan and the US) have been coordinating among themselves, the developing countries once again seem to be divided and 'reacting'.

On the future negotiations, the initial EC move was to have some decisions taken at the May ministerial meeting that would explicitly envisage the launching of a new round of negotiations -- with some issues already set for negotiations (like agricultural trade and services negotiations) and include in it the new issues like investment rules and competition policy.

But finding it running into resistance, the EC changed tack, and asked for a process to be set by the Ministers at the second meeting that would direct the General Council to take in hand a preparatory process that could enable the Ministers at their Third Ministerial meeting to take a decision.

The EC has been telling other trading nations that 'politically' to enable it to undertake further agricultural trade reforms and sell it to its own public, some of the new issues (that would be supported by its industries and service lobbies) should also be included.

The EC's proposal for a new round, with new issues -- EC trade commissioner Leon Brittan has called it the "millennium round" -- has received support from the Cairns Group of agricultural exporters, particularly those from the Southern hemisphere -- Australia, New Zealand, Argentina, Chile and perhaps Brazil. But given the resistance from others, the EC has been insisting as a minimum a reference to "comprehensive" future agenda.

Both a new round, with a comprehensive agenda, the EC and some of the industrialized nations hope, could be made into a new 'single undertaking' (like that of the Uruguay Round) and force everyone to accept them -- thus bypassing the nature of the WTO as an international treaty, to which changes and amendments could be made only in accord with the Vienna Law of treaties. 

Ruggiero, who has been chairing the informal process on the drafting of a declaration, produced an initial draft which was discussed informally Friday. But that meeting, after the formal General Council meeting, was delayed, and delegations only made general comments and made their views known.

Further meetings for a drafting exercise, based on the Ruggiero draft, are expected this week.

But as is inevitable in such matters, the initiative passes into the hands of those who table the draft (in this case Ruggiero and the secretariat, who supposedly have consulted members), and others can only suggesting changes here and there.

Amendments for changes, and alternative formulations for some paragraphs, still leave the 'framework'. 

The Ruggiero text, apart from the blurbs about the achievements of the trading system, in looking to the future, said (in terms of the next Ministerial session) that:

* in the reviews and negotiations (envisaged under the existing agreements and decisions at Marrakesh), where there are time-frames set these should be adhered to, and where no time-frames exist, deadlines should be set.

* the mandate and structure of negotiations already set to commence by end of 1999 should also be settled.

Among these negotiations already envisaged under the WTO accords, are those for the next stage of reforms in agricultural trade, the next round of negotiations for liberalising services trade.

The Ruggiero draft said that the work under existing agreements and decisions would constitute "the core" of future activities, but that it would be opportune to examine whether a "more comprehensive agenda" could be envisaged, and how to respond to the interests and concerns of all members, while keeping the WTO system abreast of the latest developments in the world economy. 

The draft seeks to mandate the WTO General Council and subsidiary bodies to intensify their work to ensure full and faithful implementation of the WTO agreements and decisions.

It also seeks to establish a "broad-based process" under the auspices of the General Council to prepare for the third session of the Ministerial Conference, and to commence work early in 1999, to prepare for:

* a substantive agenda for that session,

* recommendations to address issues relating to implementation brought forward by Members,

* recommendations concerning future work, including negotiations already mandated and any negotiations that may be agreed as a result of reviews of the WTO agreements or work undertaken as a result of decisions taken at Marrakesh and Singapore,

* recommendations concerning inclusion in the WTO agenda of any additional subject matter proposed by Members, and

* recommendations regarding organization and management of the work programme arising from the above.

At Friday's meeting, Pakistan put forward a comprehensive set of amendments to the Ruggiero text. Egypt also formulated its views on the Ruggiero text. Some other delegations like India, Mexico, and some Asean countries would appear to have made some oral comments. 

In some proposals and amendments, Pakistan envisaged work under existing agreements and decisions to form the basis of future WTO activities, but also suggested it would be opportune to examine whether a "more comprehensive agenda" could be envisaged.

Specifically, Pakistan envisages the General Council to be entrusted with the task of making recommendations to the third Ministerial Conference on: 

* reviewing the status and results of implementation of WTO agreements and decisions taken at Marrakesh in order to assess the extent to which the envisaged trade benefits have been realized; identify the problems in implementation; address the inherent deficiencies that have become apparent in the course of implementation; and examine measures for further liberalization under the existing agreements.

Separately, the Pakistan amendments would ask the General Council to consider reports from existing Working Groups and proposals that could be submitted by members regarding further work to promote the objectives of the multilateral trading system and the interests of all WTO members, specially developing countries. 

Egypt in its comments, the text of which later became available to the members, said that the Ruggiero text on implementation issues did not reflect a balanced approach. Egypt also questioned the formulation, in the reference to the Asian crisis ('a number of WTO members experiencing difficulties because of disturbances in financial markets) that trade liberalization is the solution.

Any references to future liberalization activities at the WTO should include a call for "respect of national policy objectives, and the level of development of different members."

Egypt was opposed to Members being called upon to commit themselves at the May meeting to decide on deadlines for negotiations where none are indicated in the WTO agreements.

The mandate to the General Council should address both the implementation issues and future activities in a balanced manner and within the same mandate. The language in the Ruggiero draft relating to new issues was prejudicial to the positions of countries that were not yet ready to negotiate these issues, Egypt said, in calling for a 'neutral' language. There should be a clear formulation that any decision on future negotiations and introduction of new issues should be by consensus.

India in its comments reportedly said that in terms of issues arising out of implementation there were some technical issues, and others involved mandated negotiations like those on services and agriculture, and examination of issues arising out of implementation.

These could not be linked, as the Ruggiero text sought to do, with issues arising out of the Singapore decisions or new issues like electronic commerce.

The General Council, India said, had all the powers of the Ministerial Conferences when the latter was not in session. Hence, if any consensus developed as a result of the work on the decisions taken at Singapore, it could always be taken up. But the May ministerial should not be used to forestall such decisions.