No. 2752 - FRIDAY, 10 JANUARY 1992.

THE MTO WILL PRE-EMPTS A NEW ENVIRONMENT/DEVELOPMENT ORDER.

GENEVA, JANUARY 9 (CHAKRAVARTHI RAGHAVAN). The proposed Multilateral Trade Organisation, to be established as part of the "global package" under the Uruguay Round will provide a framework for the powerful to use the trade instruments in future to enforce their views on environment and sustainable development, pre-empting any decisions and agreements that could come out of next year’s "earth summit" at Rio de Janeiro.

The worldwide environment/sustainable development movement is looking to next year's summit level meeting of the UN Conference on Environment and Development to lay a new framework of international cooperation and economic relations into the 21st century - through the proposed "Earth Charter" and the "Agenda 2l" action plans and programmes.

The run-up to the Rio summit - at the UNCED Prepcom meetings, as well as in the parallel processes for international agreements relating to climate change and biodiversity - have brought up some major North-South issues relating to very basic economic issues and national and international economic instruments (as distinguished from neo-liberalist doctrines of market-based ones).

These questions relate to fundamental issues with effects across the economy - resource use and consumption, the North "giving space" for the South to grow and eradicate its poverty by reducing its demands on natural resources including energy consumption and reduction of carbon dioxide emissions as opposed to the concept of the South adopting new patterns and resource-use, thus limiting its development and the aspirations of this peoples, enable the North continue its standards and ways of life.

In its essence the questions and answers relate to the differing concepts of environment protection and sustainable development. To the South, as a recent report of the South Centre gas pointed out: "The concept of 'sustainable development' does not mean only that the needs of the present have to be met without prejudice to the satisfaction of future needs. It also means that the needs of the North must be met in ways that do not compromise the satisfaction of the present and future needs of the South".

The way these are addressed, and international rules and agreements and an overall international regime evolved on them would create a new international regime - which some are already calling a New World Environment and Development Order - could make all the difference between survival or otherwise of life.

While these concepts are already being seen as coming into conflict with the Bush's New World Order with its political and security instrumentation through the United Nations, the proposed MTO will easily become the forum for negotiations in secret of these issues pre-empting other arrangements.

Unlike the other proposals and accords in goods or services on the agenda of the Uruguay Round, the proposals and negotiations on the MTO were part of the last minute rush of discussions - where many of the smaller and medium developing countries were not even present in the small caucus discussions.

The attempts at pre-emption through the MTO have been done somewhat subtly - through the preamble and a catchall provision that it will be the forum for future negotiations on their "multilateral trade relations".

The MTO preambles are based on GATT’s, but with some changes.

The first preamble of the GATT reads: "Recognising that their relations in the field of trade and economic endeavour should be conducted with a view to raising standards of living, ensuring full employment and a large and steadily growing volume of real income and effective demand, developing the full use of the resources of the world and expanding the production and exchange of goods".

This has been modified in the MTO: "... demand, developing the optimal use of the resources of the world at sustainable levels, and expanding the production and trade in goods and services".

This has brought in some subjective concepts about "optimal use" of resources rather than "full use", by changing "exchange" into "trade" and encompassing both "goods and services".

The MTO has a new paragraph: "Recognising further that there is need for positive efforts designed to ensure that developing countries secure a share in the growth in international trade commensurate with the needs of their economic development".

No provision in the MTO itself or its instruments have any provisions for "positive efforts" - excepting perhaps to the extent that the current Part IV and its best endeavour clauses are seen to survive in the new GATT after the various "graduations" in the changes and amendments.

Even the least developed countries, on whose behalf and for whose positions the industrialised countries oozed with concern in the negotiate process have at best gained in terms of "exemptions" from some disciplines, but there is nothing "positive" in any of the instruments to secure for them a share in growth in international trade.

Whether for the LDCs or for the others, this increased share is not in terms of the much talked about "equity" of the 60’s and 70’s but "commensurate with the needs of their economic development".

The third para of the MTO preamble is virtually the same as GATT’s second – "being desirous of contributing to the objectives by entering into reciprocal and mutually advantageous arrangements directed to the substantial reduction of tariffs and other barriers to trade and to the elimination of discriminatory treatment in international commerce" - with the difference that the GATT’s use of the term "international commerce" has been replaced by "international trade relations".

The fourth para of the MTO (the GATT has no similar provision) says: "determined therefore, to preserve the basic principles and to further the objectives of the General Agreement oh Tariffs and Trade and to develop an integrated, more viable and durable multilateral trading system encompassing the GATT as modified, all Agreements and Arrangements concluded under its auspices and the complete results of the Uruguay Round multilateral trade negotiations".

These amendments to the preamble seem to be intended, and any event achieve the objective, of enabling the future MTO (as provided in its Art III: 3) to negotiate and conclude agreements covering any economic issue on the basis of its relationships to trade, etc. - under the guise of negotiations to further multilateral trade relations as may be decided by the Ministerial Conference (which will be the supreme intergovernmental decision-making structure meeting at least once in two years).

Environment, optimal use of resources (including exercise of sovereignty by Third World in its future consumption and use of its natural resources for domestic consumption or international trade).

Before 1986, when the U.S. took a simplistic view of the procedures for a new round of negotiations in GATT covering services and goods, using the vague preambular paragraphs and the Art. XXV GATT Provision for joint action by CONTRACTING PARTIES, by merely prefixing "trade" or "trade-related" before everything, developing countries like India had suggested that under this logic, since anything could have an effect on trade, "population", "disarmament" and other issues too could be negotiated in the GATT.

With the new MTO, these will be settled in favour of the North. Though it will still need consensus of the Ministerial Conferences, the Uruguay Round and pre-Uruguay Round processes show that developing countries lack the "will" to deny consensus individually, and do not act collectively.

There are also other provisions that in the long run will go against the interests of the South.

The establishment of the MTO will force an abandonment of the long-term objective of the international community to establish a comprehensive, universal International Trade Organisation along the lines of the Havana Charter.

The provisions for the MTO secretariat, envisaging as it does the incorporation of the secretariat of the Interim Committee for the International Trade Organisation (the enabling arrangement created under the Havana Charter and by the ECOSOC) and naming the GATT Director-General (who now legally holds that office as the Executive Director of the ICITO) as the Director-General of the MTO, imply even if not formally so stipulated that the MTO is the successor organisation to the Havana Charter's ITO.

The articles of the MTO do not specifically provide for its association in any form with the United Nations - unlike the ITO of the Havana Charter, or the IMF and the World Bank which are specialised agencies of the UN though with very loose links.

The only reference is to the provision for registering the MTO agreement with the United Nations under Article 102. This too is because without it, the provisions of the MTO could not be cited in any international legal disputes.

The present GATT has the most fundamental rule of international relations - the most-favoured-nation treatment clause - incorporated in its Article 1. This, and the provision in Art. XXIX (about GATT's relationship to the Havana Charter) can be modified only through the route of amendments under Art. XXX, and any such amendment ill become effective only upon acceptance by "all the Contracting Parties".

All other amendments to the GATT, for example, can become effective, in respect of those, which accept them, upon acceptance by two-thirds of the contracting parties.

The MTO has subtly changed this.

The MTO requires that negotiations for amendments to the MTO or to any of the agreements in its annex I (the GATT and the Tokyo Round agreements, as modified, the GATS and the TRIPS) are to be concluded by consensus, they become effective, for the parties accepting it, upon acceptance by two-thirds of the members.

This has thus taken away the GATT's unanimity requirement in ratifications before taking away the most-favoured-nation treatment for all members.

The provision for accession to "any State or separate customs territory" may open the way in future for parts of territories, claiming separate customs administration, seeking accession without the consent or sponsorship of the State to which it politically a part of. This might open the way for Taiwan in future or for that matter the smaller units and groups in eastern Europe or Asia, Africa or elsewhere. There will be other political constraints, but the legal way would be opened.

The non-application clause in the GATT is so worded as to prevent the threat of non-application being used to force additional concessions.

Under GATT Art. XXXV, the General Agreement or the tariff schedules under it, shall not apply as between a Contracting Party and any other if: (a) the two CPs have not entered into tariff negotiations with each other, and (b) either of the CPs, at the time either becomes a Contracting Party, does not consent to such application.