7:35 AM Jul 12, 1996

REJECT NEW ISSUES, SAYS MALAYSIAN TRADE MINISTER

Kuala Lumpur, Jul 12 (Martin Khor) -- The attempt of some Northern countries to put new issues into the World Trade Organisation poses a danger to the sovereignty and economic interests of the South, and this should be resisted in a united way in the preparations for the WTO's Singapore Ministerial Conference (SMC).

This position emerged from most participants attending a two-day Conference on "The WTO: Perspectives from the South", held here on 9-10 July.

Organised by the Institute of Strategic and International Studies (ISIS), Malaysia, the Conference was attended by trade policy-makers, WTO diplomats, academics and businessmen from several developing countries, including Malaysia, Brazil, Bangladesh, India, Singapore, Thailand, China, Korea, Egypt, Zimbabwe, South Africa and Ghana. Invited experts presented papers on the issues before the meeting.

The theme of the Conference was set by a keynote address from the Malaysian Minister of International Trade and Industry, Rafidah Aziz, who described as "discomforting" the move by some developed countries to broaden the WTO's work programme to include "new issues" such as multilateral investment rules, labour standards, competition policy and corruption.

"These are highly contentious issues and they constitute the single greatest challenge to the sovereignty and economic prosperity of the developing countries in the future," said Rafidah.

She noted that developed countries had proposed that the WTO initiate discussions and subsequently start negotiations on liberalisation and protection of cross-border investments and rules harmonising national competition policies.

"These moves are of grave concern to developing countries as they could eventually restrict national governments in their domestic economic policy making.

"In particular, the demand that there should be free movement of investment across national borders and for national treatment imply that any investor will have the right to establish a market presence in any sector in any country and be accorded national treatment.

"This will remove the right of national governments to implementational level investment policies which may either restrict a foreign presence in certain sectors or which may provide preferential treatment to national firms to enable them to compete with large established foreign firms."

Rafidah added that some developed countries are also keen to get the WTO to forge a direct link between trade and labour rights, claiming that developing countries' imports are cheap not because of a comparative advantage in production cost but because of unacceptably low labour standards.

"They have argued that since labour standards are higher in developed countries, production costs are therefore higher and that means their producers have to compete unfairly with others from the developing world. This is not only politically unacceptable to developing countries but also does not make sound economic sense."

Rafidah said developing countries were apprehensive that these contentious issues like investment and labour standards would be formally placed on the WTO agenda at the insistence of the industrialised countries.

"These issues will have far reaching repercussions on our development efforts and objectives. Developing countries must stand together and adopt a united approach to counter these proposals," she declared.

Malaysia regarded the effective implementation of the Uruguay Round commitments by all WTO members as fundamental to the multilateral trading system's credibility, she said and went on to criticise the actions of some developed countries that resorted to continuing use of unilateral discriminatory trade measures.

"Although there is a marked trend towards lower levels of protectionism through tariff reductions, a wide range of market access impediments have been put in place.

"These have often developed through the failure of industrial economies to adjust to emerging sources of competition, particularly in Asia.

"For example, the use of anti-dumping and countervailing measures has become a favourite weapon of importing competing firms and their governments in the developed countries to provide a shield for themselves against competition from developing countries."

Such anti-dumping actions, used for protection, are likely to increase in future.

"This together with arbitrary interpretation of rules of origin and discriminatory imposition of products/process/production standards would pose a significant threat to the export prospects of many developing countries as it would negate all the trade liberalisation commitments of these developed countries."

Commenting on the Singapore Ministerial Conference, Rafidah said the WTO should avoid over-crowding its agenda with issues that will inhibit the development and trading prospects of countries, especially from the developing world.

Instead, the WTO as a matter of priority should ensure that rules and disciplines and the provisions of equity are respected, and that market access must not be hampered by trade policies inconsistent with the multilateral rules.

In short, said the Minister, "we need to continue striving for fair and equitable rules and their full implementation". The WTO agenda should be considered against this background, and "we must have a strong sense of priorities as to what should be the areas and issues that must be considered by the WTO".

Rafidah said that in building a Southern perspective on the WTO's role and the agenda of the Singapore Ministerial Conference, "we must strive for a united approach; if we are divided we will continue to be dominated by the industrialised countries. It is crucial as WTO members we assume a pro-active role in shaping its future direction."

The Minister proposed that participants consider whether a consensus could emerge that the Singapore meeting:

** Focus on a review and stocktaking on the progress in the implementation of the Uruguay Round commitments;

** Focus on the completion of unfinished business and work related to areas specified in the built-in agenda;

** Disagree with proposals to include "new issues" on the Singapore agenda (multilateral investment rules, competition policy, labour standards and corruption).

In the two days of discussions, many participants supported the Malaysian Minister's three-point proposal as the basis for the Singapore agenda.

Zimbabwe's Ambassador to the WTO, Dr Tichaona Jokonya, described the Minister's opening address as a "wonderful send-off". In implementing the Uruguay Round (UR) commitments, he said, smaller economies are facing a host of problems. Therefore the point made by Rafidah, that "the WTO should avoid overcrowding its agenda" was very crucial.

Dr Jokonya said the simple fact is that Singapore should be a review conference to focus on the Uruguay Round agreements and on "how far have we gone".

"We haven't really started the implementation yet. How can we talk about the new issues," the Zimbabwe envoy asked.

Dr Jokonya said the Singapore Ministerial should not be a meeting for a club of the rich. By not wanting to discuss new issues, developing countries should not be accused of having a policy of "doing nothing", but instead be seen to be adopting a policy of fighting for their own interests.

He added that small countries are facing "incredible problems" in implementation of the Uruguay Round agreements. He hoped that by focusing on these problems, the Singapore meeting could come up with conclusions on the extent to which there had been implementation and how to overcome the difficulties.

Bangladesh's Commerce Secretary, Mr Mofazzal Karim, agreed with Rafidah's keynote address and said the Singapore Ministerial should examine how the implementation of the UR agreements would affect different countries differently. Whilst the industrial countries were fully equipped to meet their obligations, many developing countries do not have the machinery to do so.

From the agreements, it was not clear whether poor countries at all benefited from the UR. If they do not benefit, they should be compensated. Therefore, a stocktaking exercise should be done. Enough work remained to be done, including for the built-in agenda, so it is not the time for work on any new issues.

Mr Karim said the new issues were very controversial and had important implications. With developing countries already burdened with existing implementation problems, they should not be rushed into discussions on these new issues which only the developed countries were pushing for.

Similar points also dominated the discussions in the Kuala Lumpur Conference's sessions, on implementation of the Uruguay Round, the new issues, the proposed investment agreement, services and the final panel session.