SINGAPORE WTO MEET SHOULDN'T TAKE NEW ISSUES

9:20 AM Oct 27, 1995

SINGAPORE WTO MEET SHOULDN'T TAKE NEW ISSUES
Geneva 26 Oct (Martin Khor) -- The Singapore Ministerial meeting in December 1996 is an occasion for reviewing the implementation of the Uruguay Round, its pluses and minuses, and should not be an occasion for asking developing countries to agree on a new agenda of issues or start negotiations on them, according to Haron Siraj, Malaysia's Permanent Representative to the UN offices in Geneva and the WTO.

Brazil's Permanent Representative, Amb. Celso Lafer, seemed to share the view that developing countries, already facing problems of implementation, should not be burdened with new issues now. This, he said, was apart from the question whether there should be investment rules and whether or not it should be in the WTO

In an interview, Haron Siraj, was of the view that the issue of investment is 'not mature' and that developing countries are not well informed about its implications, especially in the WTO context.

In examining the EU proposals to introduce the rights of investors in the WTO, said Haron Siraj, it was important to note that investment flows were interrelated not only with trade but also with a range of other issues, such as financial flows, technology transfer and the behaviour of companies (especially restrictive business practices).

There is thus a need for a balanced view on the effects of the inflow of foreign investment in developing countries, he said.

"There are benefits and costs to foreign investments, and both have to be considered. Benefits include employment, higher exports and spinoffs to the local economy. But there are also costs including social and environmental costs, and opportunity costs such as loss of taxes due to the need to provide incentives. The balance of these costs and benefits have to be added up."

At the international level, developing countries have an interest in looking at the link between foreign investment, monopolistic powers and competition rules; transfer pricing and other restrictive business practices; and the terms and conditions of technology transfer.

"Thus, if you want to look at the rights and freedoms of foreign investors, you also have to look at the obligations that these companies have to the host countries," said Haron Siraj.

"Foreign investment requires give and take. Developed countries should not expect developing countries to give away so much and yet be expected to take so little."

Whilst many developing countries have now accepted foreign investments, the Northern countries must also allow the South the right t look at the balance sheet of advantages and disadvantages.

"Developing countries have already made a lot of commitments in the Uruguay Round with respect to granting more rights for foreign investors, for instance through the TRIMs, TRIPS and services agreements. These commitments which have already been made are heavy and burdensome to developing countries, and constitute the negative aspects of the Uruguay Round for developing countries, whilst on the plus side is increased market access for their goods."

In the Malaysian ambassador's view, whilst the subject of investments can be discussed, the WTO may not be the right venue for comprehensive discussions on the subject. There should therefore not be any presumption that the WTO should take up the issue.

"A prior discussion should be on what is the relevant venue or venues for discussions on investment to take place, and what is the relevant competence of different organisations. For instance, the in vestment issue is also being dealt with in the World Bank, the IMF and UN agencies such as UNCTAD. The WTO is only one of the bodies with competence, and the issue it should deal with is the trade aspect."

Haron Siraj is also of the opinion that the WTO Ministerial Meeting in Singapore in December 1996 should focus on a review of the effects of the Uruguay Round and "should not be taking on a new agenda of negotiating issues."

The Ministerial Meeting, he added, was mandated to be a review conference. "It should cover such topics as the extent to which the Round decisions have been implemented, what are the reasons or difficulties in attaining the results, to take stock of the rules and regulations that are detrimental to the full implementation of the Round, and so on.

"It would be too much to expect developing countries to agree to a new agenda of issues and to start negotiations on new issues, when they are already having so much difficulties just trying to implement what has already been agreed to in the Uruguay Round."

Brazil's permanent representative to UNOG and WTO, Ambassador Celso Lafer, shared the view that new issues like investment should not be brought into a new round of negotiations, at least not at this stage.

"The requirements for implementation of the Uruguay Round are so overwhelming, and we are already stretched in trying to cope with these at the moment. We are not prepared to be launched into a new round of negotiations on a new set of issues.

"For trade officials and negotiators, there is already a constant stress with a high volume of work in trying already to cope with the consequences of previously approved agreements, and current negotiations at international and regional levels.

"We don't have good enough analytical capacity to face a new Round. At this stage, and for the Ministerial Meeting, it is good enough to deal with the implementation of the WTO and for stocktaking of the current situation. We should not be pushed into looking at new issues which we cannot handle at this stage."