May 26, 1998

BROAD PREPARATIONS FOR NEW NEGOTIATIONS, PR OFFENSIVE

Geneva, 23 May (Martin Khor) -- Judged by pronouncements of the WTO leadership, developing countries face in the months ahead a broad-based WTO preparatory process for launching negotiations in 1999, combined with a "very aggressive" US market-opening agenda abroad for its TNCs, and a public relations, charm offensive to win over the civil society protesting the WTO and its version of globalization.  

This was the message that came out loud and clear from the press conferences of WTO Director-general Renato Ruggiero and the US Trade Representative, Ms. Charlene Bershefsky after the conclusion of the 2^nd Ministerial Conference of the World Trade Organization here. 

Ruggiero's statements showed that the WTO secretariat's main concerns in the days ahead would be the starting of a broad-based preparatory process for the 1999 Ministerial Conference, and the launching of a major WTO public relations effort to win over the increasing army of sceptics of the WTO and its processes -- the non-governmental organizations (a mixed crowd of public interest environment and development groups, business and labour lobbies) and protestors against globalization.  

And the remarks of Bershefsky, immediately following the WTO press conference, as also the Monday evening address of US President Bill Clinton to the 50th anniversary celebratory meetings of the WTO, showed that the US would be adopting a double-barrelled strategy: a "very aggressive" market opening agenda to enable its giant corporations to get greater access to markets of other countries, and a charm offensive to win over its NGOs and other sceptics of the globalization process.  

The Ministerial Declaration adopted by the 2nd Ministerial Conference, the remarks of Ruggiero said, had launched a "broad-based" preparatory process that left every option open -- ruling nothing out and nothing in for the negotiations to be launched at the 3rd Ministerial to be held in the United States, probably in the 3rd quarter of 1999.  

In his replies to questions, Ruggiero indicated that some WTO members felt an urgent need to respond to the public disillusionment against the WTO (made clear by the demonstrations before and during the 2^nd Ministerial in Geneva, and in scores of places around the world) and the very strong criticisms of NGOs at their parallel meetings here about the negative effects of the WTO on the environment and the marginalization of peoples and societies.  

The need for 'greater transparency' in the WTO, greater dialogue with civil society and providing access to NGOs to give inputs to panels, were stressed by the Director-General, who indicated that even without formal decisions he and the secretariat were already passing on to the dispute panels the 'briefs' and 'views' of NGOs on disputes.  

At her news briefing, where she was introduced by Ruggiero as the President of the Ministerial Conference, Ms. Bershefsky said "it is very important that the US continue its very aggressive market opening agenda... Americans tend to believe that greater market openness abroad helps to compensate for yet greater import penetration into the US, and that is the current situation."  

She also made clear that in this aggressive market-opening agenda, there would be no concessions to developing countries, which had to meet their legal commitments according to the timetables laid out in the Uruguay Round agreements. Most delegations, she said, recognise the importance of implementation and of ensuring that commitments made are followed through. "From the US point of view," she said, "this is critical to the multilateral system. The WTO is after all a contractual institution. We make commitments, others make commitments, we implement, they implement. There is dispute settlement if a party fails to do what it committed."  

She said the US appreciated that implementation could be difficult and that was why developed countries had offered technical assistance to ensure commitments can be implemented on time. "But it is the nature of this institution that we must respect timetables laid out and that countries that make commitments adhere to them."  

Another journalist remarked that President Clinton had talked about an ever-more-open trading system and on more rapid liberalisation, but had failed to show recognition or sympathy for the problems of developing countries which had suffered negative effects from over-rapid liberalisation. Even the East Asian countries were in crisis due to financial liberalisation. Could not the US recognise that some of the WTO rules themselves worked against developing countries and should be reviewed, rather than merely providing technical aid to implement those rules that generated problems?

Barshefsky skirted the issue of reviewing the WTO rules and instead spoke of Clinton being "extremely sympathetic with and sensitive to" developing countries, citing as an example his recent Africa trip, and offers of duty-free treatment for LDCs, debt forgiveness and GSP expansion. At the same time, she said, the poor policy choices of developing countries, especially in Africa, had hampered growth as much as lack of preferential benefits. It was terribly important that developing countries "also embrace more market-opening policies" to attract investments and spur indigenous development. "This is essential, it is one of the lessons of the Asian crisis as well."  

According to Ruggiero, the 2nd Ministerial Conference has ended with seven significant results:  

• The launch of a broad-based process to prepare for the next Ministerial Conference at the end of 1999, with every option for this process left open;  
• the commemoration of the 50th anniversary of the world trade system;  
• the declaration on global electronic commerce to launch a comprehensive work programme on all trade-related aspects of e- commerce and to continue with the 'no custom duties' on electronically- transmitted items;
• Emphasis on the growing relevance of environmental, social, health, development and financial aspects in the management of trade policy, the need to increase transparency and recognition of the need to improve dialogue with civil society;
• Growing relevance of new technologies to provide opportunities for accelerated development and wider access to information and education;
• Need to emphasise commitment to implement the Uruguay Round agreements and the need to take care of the needs of developing countries; and
• a very high political debate, with visions and ideas, on how to manage the world economic and trade system. 

Ruggiero said the delegates recognised that globalisation is a reality but that its management has to be improved; that the validity of the multilateral trade system was affirmed, even if there were differences of opinion on how the system has worked. 

As for the future work programme and options, whether it would be a sectoral approach or a comprehensive one, Ruggiero said there had been several debates on this at the meetings. Some countries, he said, had emphasised the need to face the problems of implementation of the present agreements before taking up new issues, and that they would not want to enter new negotiations before they succeeded in implementing existing ones.  

As for a sectoral or a comprehensive approach (to future work), Ruggiero said it had been left open "how to reconcile the two objectives." One objective was of comprehensive negotiations where all the interests are taken into account at the same moment, while the second one was that they could not spend seven years to reach an agreement (as in the Uruguay Round). 

Asked about the effect on the Conference of the growing protests and public discontent against the rapid liberalisation pushed by the WTO (as evidenced by the demonstrations in Geneva), and whether the countries of the North recognised the many problems faced by developing countries in having to implement the Uruguay Round agreements, Ruggiero said that "seen from the inside, the problems of the outside were seen in a different way."  

There was, he claimed, a much greater unity of purpose (among WTO members) than seen by the press or the public outside.  

"The system works very well," he insisted, although there were views by some that the system did not take into account the interests of developing counties, and there were complaints about the problems of marginalisation. But the division among members was on their judgment of the WTO. The need to have a strong WTO was shared, and the differences lay on how to cope with the problems.  

Asked about how the dialogue with civil society would start, Ruggiero said he would dedicate his time, after the Ministerial, on how to organise the dialogue. But this was no easy task, he added.  

As for the meeting of Trade and Environment Ministers (proposed by the EC and the US), and whether the dialogue with civil society meant the WTO recognised that things were wrong in the past, Ruggiero said there was a sense of urgency expressed by some delegations on the environment issue. The work of the WTO's Committee on Trade and Environment should be accelerated. "Sometimes we are accused of omitting environment objectives. This is not true. The problem is that there are different measures to deal with the environment."  

Asked about the US proposal to enable NGOs to give inputs at WTO panel hearings and whether developing countries were sceptical about this as there were few NGOs in the South who could participate, the Director-General replied that the Secretariat was already helping NGOs to provide inputs. He said he had received amicus curie briefs from some NGOs and he had sent these on to members of panels, who had read them.  

Ruggiero added that "when you see the actions of the panel, you would see they had received the documents and had put them in the annex of the panel findings... We are acting at the limit but we're doing it."  

This remark of Ruggiero, several developing country negotiators and some outside experts said, indicated that the secretariat has been acting contrary to the rules of the Dispute Settlement Understanding and of the procedures of the panels, and in effect a violation of the letter and spirit of the rules that lay out the responsibilities of the secretariat and the functioning of panels set out in DSU rules and the appendix.  

Some trade diplomats said that the US in the shrimp-turtle panel dispute, appears to have annexed some of the NGO briefs, selectively including those favouring the US position, and even this was sent to the panel in its second reply to the views of the complaining delegations - a procedure that is itself viewed as illegal. The issue is expected to be taken up at the DSU review process now under way. 

While some of the Northern environmental NGOs have been seeking to have the right to file amicus curie briefs, southern NGOs have been sceptic. This, they said, would not in any way help the South, whose NGOs demand full transparency of the negotiating process to their own governments and to the public.  

At a TWN briefing session for NGOs on Wednesday, Mr. Chakravarthi Raghavan, Chief Editor of the South-North Development Monitor, asked development NGOs, particularly from the South, not to be 'fooled' by such gimmicks, when the real issue was of participation and transparency of negotiations to the developing country governments themselves, rather than the Quad and US and EC, taking decisions elsewhere that are forced on others at the WTO. NGOs, he advised, should insist on full transparency of the negotiating process -- as in any multilateral treaty negotiations -- and a listing of who were present or absent when decisions were taken.  

The talk of allowing others to be present at dispute settlement processes, and for amicus curie briefs to be filed, Raghavan said, would help some public interest NGOs and provide some jobs to their trade experts, but it would also tilt the scales further by enabling the TNCs to set up NGOs to lobby panels, and give employment to some US and European lawyers (who might function for a share in benefits), but would not benefit the people of the South.  

As for future cooperation with the ILO, Ruggiero said the WTO Secretariat had been invited by President Clinton and others to strengthen dialogue with the ILO Secretariat. "We meet regularly and will continue to do that. We support the ILO Secretariat's efforts to get a declaration on working rights, which will be a major step, in line with the Singapore Declaration." 

However, at a pre-conference ICFTU-organized meeting, the ILO head, Michel Hansenne had described the ILO-WTO cooperation as at no more than social meetings, and indicated his organizations desire for a structured institutional meetings and cooperation - a move that was rejected at Singapore by the WTO ministers.  

As to whether, as rumoured, the multilateral agreement on investment will be negotiated in the WTO, Ruggiero replied: "Ministers decided in Singapore they would decide on what would be the follow up when they receive the report of the trade and investment working group in December 1998." At that time, he added, there will already be a process of negotiations on various issues, and this question is in the pipeline of that process. "We will have to wait for the Ministerial Conference in the US to know the follow up."  

Asked why so much time was spent on the electronic commerce issue, when so few countries were involved in e-commerce, Ruggiero said in just a few weeks the US was able to get the support of all delegations, as everyone understood they had a stake in the issue. "We agreed to a wide programme, not just agreeing to not impose customs duty on transmissions, but a wide programme on trade related issues of electronic commerce up to the next Conference."  

Asked for a follow up to the high-level meeting on LDCs, Ruggiero said the Conference had agreed to continue the programme for LDCs. The WTO had held round-table meetings with almost all LDCs, and this would continue as it "gives the human dimension to globalisation." He said the WTO should organise a Ministerial meeting to take stock. 

"By the next negotiations, we should have free trade for products of LDCs, as was agreed to by many delegations. I hope there will be consensus on this by the next Ministerial."  

A journalist from China remarked that Ruggiero had said the WTO could not afford seven years to conclude another Round but that it had taken China ten years to try to join the WTO. What could the WTO do to accelerate the accession?  

"I understand your view," he replied. "I think there's a strong will to go as fast as possible... I hope we are on a good track." 

At her press conference later, Bershefsky while supporting the accession processes of countries wishing to join the WTO, left little doubt that the Chinese would have to make much more significant market opening concessions (on goods and services) before they would be allowed in. She also thought that Russia was far away from completing an accession process. 

The US Trade Representative said in regard to the future work, the priority for the US was to get negotiations on agriculture and services to start on time, whilst the question of whether to have a Round was subsidiary. 

The US had sought a broad Ministerial Declaration in relation to the General Council's ability to examine a full range of issues and options on how to proceed. "The principle is that the built-in agenda, especially on agriculture and services, should begin on time, agriculture in 1999 and services in 2000. The preparatory work for this must be completed." 

Barshefsky laid out the US thinking on the future negotiations as follows: 

First, proceeding on the built-in agenda, which already has a fixed schedule and does not depend on whether other negotiations take place. Second, on the scope of other issues, other delegations had made good suggestions, and the General Council should study them. Third, on the issue of having a Round, or "Round-Ups" or "Round- Outs", the real point was to firstly determine which issues should be negotiated and then secondly decide how best to proceed regardless on what it is called. 

The US trade minister stressed agriculture sector was critical to the US, and market opening there was a "principal US objective." On the final day she and (US Agriculture) Secretary Glickman had met with the Cairns group to discuss strategy and tactics. "This is a reason we were very insistent that all the obligations of the Marrakesh Declaration with respect to the built-in agenda be met, and that agriculture negotiations, no longer preparations but negotiations, would begin in 1999. This is critical." 

Barshefsky elaborated on the new US theme of transparency and involving civil society in the WTO, and said this was now urgently needed to counter the public's suspicions and mistrust of the WTO system, which she said was now the greatest threat to the global trade system. 

Citing Clinton's speech, she said the WTO must open up to NGOs for consultation and in the dispute settlement system. "The system must be responsive to our public," she said, adding that statements at the Conference recognised the need for greater public understanding of the role of trade in creating prosperity, and the need for global institutions to be as transparent as national ones.  

"Many leaders recognise that the rights of workers and environment must play a role," she said. "The greatest threat to the global system comes not from the difficulty of negotiations or the question of whether there should be a new Round, but from the failure of public trust and the public suspicion of the system, the public mistrust of secretive organisations."

Asked whether opening up the panel hearings would lead Washington law firms to take over the dispute settlement system, Barshefsky said the US was not proposing to open up the panels or to neglect their government-to-government nature.  

The point was that this process is akin to administrative proceedings in the US, and in those proceedings, when briefs are filed and decisions rendered, they are made public. "Interested parties who have standing are able to file Amicus briefs and contribute views," she said. These are common in the US legal proceedings but absent in this global institution, and "it is this disjuncture that needs to be remedied and can be easily remedied whilst fully maintaining the government-to-government nature of the process." 

Asked why there was scepticism and suspicion in the US towards the WTO and the UN and about economic globalisation in general, Barshefsky gave a lengthy reply, revealing the depth of the anxiety in the US administration about the public backlash against globalisation and the WTO. 

She said the current situation in the US (against globalisation) was not a temporary phenomenon. "You see this not just because of shifts in polling data, you see this now in France, in the UK, in Germany, in Italy, in Russia now, which is why reform has been very difficult. You see this in Latin America. 

"You see ordinary people who have the sense that they live in a global economy, but don't quite know how they fit, and who don't quite see how the global economy is increasing their paychecks, or is accountable for their job, and who fear the global economy may be responsible for their job loss at some future point." 

She added that trade creates wealth, as over a third of US growth has come from exports. "And yet even the very workers whose wages depend on those exports fear the global economy." 

The fears over globalization was not a temporary phenomenon but had more to do with massive shifts in technology and the pace of technological change making some jobs obsolete, "real phenomena that ultimately all nations will have to grapple with." 

She said this was not an issue of whether the situation would change if the President is a Democrat or Republican, but something much more fundamental and different. This was why virtually every leader touched on these issues at the WTO Conference, and had become the subject of discussion at the America Summit, at APEC, and the G8.

"This is not temporary, but a phenomenon we can deal with as the public becomes better educated, as countries have better safety nets for those who lose their job, better training, and greater transparency so there is not a distrust of the global economy but instead at least an acceptance of its potentially positive power." 

Mrs. Bershefsky thus made clear that the US administration has become very concerned that public reaction against economic globalisation can increasingly pose a threat to the global trade system. However instead of examining the rules and operations of the WTO system for review and possible reform, the US approach is there is nothing wrong with the rules (which the US insists every country has to strictly implement according to schedule, or else face a panel hearing).  

The US planned remedy is thus to be a public relations exercise, or charm offensive, to convince the NGOs and the public that it is their perception that is misguided, and that there is nothing wrong with the system.