1:47 PM Nov 15, 1996

LDCS FOR DUTY-FREE, QUOTA-FREE MARKET ACCESS

Geneva 15 Nov (Chakravarthi Raghavan) -- Ministers of the Least Developed Countries, Members of the World Trade Organization, have picked up an idea floated by the WTO Director-General, Renato Ruggiero, and have called for market access measures for their exports, through a contractual duty-free, quota-free treatment.

But the idea of such treatment for their exports, and WTO commitments towards this end, mooted by the WTO head, Renato Ruggiero, has had a very cool reception from the US and the EU.

One EU trade official said this week that while sympathetic, the Ruggiero initiative would not be accepted, and noted opposition from agriculture interests, as well as textiles and clothing interests in Europe.

"By guaranteed quota-free access, we will be committed to allow any LDC which sets up a textile industry to trade freely... that is a fairly difficult proposition," he said, noting also that the US administration had no congressional authority for any such trade concession.

The Ministers from the 28 least developed countries (LDCs), Members of the WTO, who are attending a three-day session (13-15 November) at the invitation of the World Trade Organization, adopted and presented a declaration.

The three-day meeting of the LDC Ministers was due to wind up Friday with what the WTO described as "keynote addresses" (a term usually used for speeches at the beginning of such meetings) by UNCTAD Secretary-General Rubens Ricupero on "The Promotion of Equitable Economic Development", and by Ruggiero on "Participation of LDCs in the Multilateral Trading System and the Road to Singapore."

The Ministerial declaration was drafted and adopted by LDC Ministers on 13 November, at a meeting they held that afternoon among themselves at the UN Conference on Trade and Development, and was due to be presented at the WTO at the meeting Friday -- when Ruggiero and Ricupero were to speak at the final session.

The LDC Ministers called on the Singapore Ministerial Conference (SMC) to adopt a comprehensive plan of action in favour of the least developed countries and among other provide inter alia for:

* concrete action for full and expeditious implementation of all special and differential measures accorded to LDCs under the Uruguay Round Agreements (URA), including the Marrakesh Declaration related to LDCs and the Ministerial decision in favour of LDCs, and the special measures concerning possible negative effects of the (agricultural) reform programme on LDCs and net food-importing countries;

* providing adequate technical assistance to LDCs with a view to facilitating implementation of their obligations arising fro the URA and strengthening their negotiating capacity;

* adoption of further measures in the area of market access for all items of exports of LDCs, in particular, by providing duty-free and quota-free treatment thereto; and

* adequate reflection of the particular situation of LDCs and their interests in the work of WTO, including in the pursuit of the built-in agenda.

The Ministers noted that in the early 1990s, the share of LDCs in both world exports and imports had fallen by one-half and one-third respectively from the already meagre levels of 0.6% and one percent respectively in 1980. "This trend indicates that LDCs as a group continue to be further marginalised in international trade."

The Ministers noted that the URA posed both challenges and opportunities for LDCs.

On the one hand, the declaration said, the LDCs would lose margin of preferences in major markets, while being required to implement a series of obligations arising from the Agreements. On the other hand, the LDCs are not in a position to take advantage of new trading opportunities because of severe constraints on supply capacities of exportable goods and services.

"In the light of this," the Ministers said, "there is urgent need for adopting measures to enable LDCs to address problems relating to supply capacities of exportable goods and services, access to markets for their current and potential exportable items, and fulfilling their obligations from the URA.

While the LDCs will need to continue and strengthen national efforts towards economic reform and building supply and competitive capacities, they need adequate assistance from their trading partners and international organizations, particularly WTO, UNCTAD, ITC, World Bank, IMF, UNDP, UNIDO and the Common Fund for commodities. The ministers also stressed the important role of economic and technical cooperation among developing countries.

Referring to the various problems faced by the LDCs, the Ministerial Declaration said that the special and differential measures for LDCs within the WTO agreements alone will not be enough to enable LDCs to overcome the challenges and reap the potential benefits of the URA.

There is need for complimentary action to promote development of LDCs by development and trading partners and multilateral organizations through bilateral and multilateral aid, both financial and technical, to alleviate supply-side constraints and enhance diversification and competitiveness.

The LDC ministers also highlighted the imperative need for decisive reduction of the debt and debt servicing burden of LDCs and for a substantial increase in level of ODA.

During their private discussions among themselves on 13 November, participants said that several ministers and senior officials from the Capital were concerned about the possible cross-conditionalities between the WTO and the two Bretton Woods Institutions. Some of them noted that even though they had no WTO commitment on liberalisation, the BWIs were already pressuring them to do so unilaterally.

The WTO head, Mr. Renato Ruggiero, had made a proposal to the G-7 at their Lyon Summit this summer, for duty-free, quota-free WTO guaranteed market access for the LDC exports.

But this got a "cool" reception from the USA as well as the Europeans.

Ruggiero himself has however been persisting with the idea, and has said that with such market access, investments will flow to the LDCs.

The meeting of LDC ministers that he called, and brought in Ministers from 28 LDC members to Geneva, was intended to get steam behind these ideas of Ruggiero.

Ruggiero and the WTO officials have also been hoping that they would be able to get the LDC ministers to support the efforts to start a process at Singapore for negotiations for a multilateral investment agreement.

[Ruggiero has been pushing this idea of a MIA at the WTO. The European Commission raised this idea at Marrakesh, and later outlined that it envisaged through such a framework the right of foreign investors to invest and get national treatment (same or better treatment as domestic investors) as also MFN treatment. While the EC officially has been for start of a process of negotiations at Singapore, Canada and Japan have been advocating starting a work programme and study process at Singapore. But it has been resisted by a number of developing countries -- Egypt, Ghana, Haiti, India, Indonesia, Malaysia, Tanzania and Uganda. Several Latin Americans have said they could go along with a study process.

[Meanwhile, after a small green room 'drafting session' Friday morning, some of the key countries involved said that there was a deadlock on investment, as also on labour standards. The US which is pushing the last has been insisting that without it, there will be no outcome at Singapore. And the EU has also reportedly come up with new language on Trade and Environment - in effect jettisoning the carefully negotiated compromise within the Trade and Environment Committee.

[At this rate, all the 'compromises' in various WTO bodies, would be reopened, one trade official feared.]

The LDC Ministerial Declaration, while focusing on the problems of the LDCs, and their continued marginalisation, has been silent on this and other "new issues".

One European trade official said this week that the Ruggiero idea of special market access treatment for LDC exports has run into a lot of opposition and it would not be feasible.

The US administration did not have this kind of authority (from Congress) to provide trade benefits. And while community officials were sympathetic to the idea of helping the LDCs, there was opposition from the agriculture interests and officials. Several of the "more advanced" LDCs were also opposed. But the EC would try to provide some benefits through the GSP schemes, and so could others.

The GSP schemes, being unilateral, are subject to changes and withdrawals by the country giving such preferences at any time. Most of the current GSP schemes also exclude "sensitive" products -- generally agriculture and fish products, as well textiles and clothing and other labour-intensive competitive imports.

But the Ruggiero proposal is not about giving concessional entry through GSP etc, but about entering into a commitment at the WTO.

And a commitment to provide quota-free access would mean that "we will be committed to allow any LDC which sets up a textile industry to trade freely, and that is a fairly difficult proposition," the EC official said.

The World Trade Organization, with funding from Norway, Korea and the Czech Republic, set up the meeting and invited Ministers from the LDCs to come to Geneva.

As one participant put it Friday, over the three-days, "we have heard lectures from WTO officials and various personalities, but not any interactions between Ministers and the WTO or other WTO members".

The WTO itself has not had much experience of handling such events or the protocols and other things that go with such meetings.

One resident LDC ambassador to the WTO said that this perhaps was responsible for the gaucherie of the Ministers being asked on the first day to line up before a counter to get their per diems. Officials at other international organizations, who routinely invite the LDCs and pay for their participations at international meetings (but do so in a very discreet way) were appalled at the lack of sensibilities at the WTO. "I am sure the WTO has won many friends among LDC ministers," one of them remarked.