INITIAL POSITIONS SHOW NORTH-SOUTH DIVIDE ON TALKS

SUNS #4289 Monday 28 September 1998

INITIAL POSITIONS SHOW NORTH-SOUTH DIVIDE ON TALKS

Geneva, 25 Sep (Chakravarthi Raghavan) -- Trade negotiators laid out Thursday, at the Special Session of the WTO General Council which launched a preparatory process for the next ministerial meeting, their initial positions on further trade talks at the WTO, agreed on a schedule of meetings, and on a work programme on electronic commerce.

The Special Council meeting, which had on its agenda the fixing of the date of the next ministerial meeting (to be hosted by the United States) was unable to do so, Egypt withholding its consensus, as the WTO spokesman put it, to check whether the US proposed dates (30 Nov - 3 December 1999) clashed with other meetings, and there will be further consultations.

However, other participants said, Egypt took note of the US proposed dates, but pointed out that ministerial meetings are to be held every two years, and hence in 2000. If the raison d'etre of the dates were aimed at accelerating the process and push for comprehensive multilateral trade negotiations as a single undertaking, the General Council has not agreed to it. If it was something else, Egypt would still need to check whether the dates conflicts with other international meetings.

The WTO press office briefed the media on points made by delegations, and made available copies of statements made by the EC and the US, but not that of other delegations.

In initial presentations, the European Community, and the EC-acqui nations of Europe, and Japan laid out their demands for "comprehensive" talks, including new issues identified for study at Singapore (investment, competition policy and trade facilitation), while developing countries underlined their priority to implementation issues and the built-in agenda, and declined to consider or take any decisions on new issues until the working parties mandated at Singapore to study these issues have reported to the General Council at end of this year, and the General Council can adopt a decision or recommendation on a further course of action.

The United States itself kept its options open, and did not commit itself either way, but insisted on start on time of negotiations already mandated - on agriculture and the next round of services
negotiations.

The Special Council meeting has been mandated by the 2nd Ministerial meeting to set up a process to identify and make recommendations to the next ministerial on a work programme of further liberalization, sufficiently broad-based to respond to the interests of all members.

A number of countries who spoke Thursday also supported the idea of the new negotiations being treated as a "single-undertaking" -- forcing countries to accept or reject the package, and a time-frame of 3-4 years for the conclusion of the negotiations after start.

India, Asean, Egypt for Africa and for itself, and other developing countries referred to a number of accords of the Uruguay Round, where the promised benefits or balance has not accrued to developing countries, and need to be addressed, in the preparatory process, from the perspective of special and differential treatment.

Egypt, for Africa, and several other developing countries, also questioned the thesis (of the WTO head, the EC and other industrial countries) that solutions to the problems of developing countries hit by the financial crisis lay in those countries "further liberalising" access to their own markets.

The EC called for comprehensive negotiations at the millennium, with an agenda reflecting the interests of all countries. Sectoral focus, as in the case of the information technology agreement, served the interests of only a few countries and would not work, it argued.

The EC set out as 'illustrative' its wish list -- services; further negotiations on Agriculture, as required in Art. 20 of the agreement, for fundamental reforms and 'non-trade concerns'; substantial further
reduction of industrial tariffs; "traditional" issues for rule-making including the Sanitary and Phytosantiary agreement, Technical Barriers to Trade, and new issues like Competition policy, comprehensive framework of international investment rules, trade facilitation; Trade and Environment; government procurement; TRIPS to ensure the accord keeps up with new technological developments; electronic commerce; and other additional issues that members might raise as the work programme developed.

Australia called for negotiations on issues already mandated, agriculture and services, as also industrial tariffs. It supported a single-undertaking approach to the comprehensive negotiations, but
called for an "early harvest" in agriculture.

A separate Cairns group statement distributed called for end to the export subsidies and competition in this (that both US and EC) being indulged in by some of the major trading partners.

The United States said that while several members seemed to have answers for what the preparatory process should recommend to ministers, the US would be unable to do so until it was able to complete over the next several months its consultations with industry and Congress. But
they could not afford to take the seven years it took for the Uruguay Round, and ways must be found "to tear down barriers" without waiting for problems on every issue and sector to be resolved.

However, the preparatory process must spend adequate time at the beginning to address the important issue of implementation and the launch in time of negotiations already mandated. As for new issues, arising from the Singapore work programme, these have to be carefully considered, and collective consideration could begin only after the end-of-the-year reports from the working groups.

The Czech Republic, speaking for the central European countries, emphasized both implementation and future work (new issues), and for a comprehensive round of negotiations including on investment and competition.

Japan also supported "comprehensive series of talks", and mentioned in particular: full and faithful implementation of existing agreements, including obligations undertaken by developing countries on TRIPS, TRIMS agreement (which calls for review before 5-years), a sufficiently broad-based further liberalization with comprehensive negotiations including industrial tariffs, investment rules and other new areas in addition to agriculture, services.

Korea called for comprehensive negotiations to reflect a balance of interests, and including all issues "mature enough" to be negotiated -the built-i agenda, market access for industrial products, investment, competition policy, transparency in government procurement and regional trade accords.

Chile supported the view for 3-year time span for the negotiations, and to include apart from agriculture and services investment issues, and if there was a consensus, competition policy questions.

Brazil stressed the importance of the single-undertaking concept for the negotiations, delineating these from the financial services and telecommunications accords, which had been mandated as part of the Uruguay Round. Agricultural and services issues, part of the built-in agenda, should not be seen as individual sectoral talks.

India, in what the WTO spokesman described as a lengthy statement (the text later made available by the delegation showed it was slightly shorter than the EC statement distributed by the WTO press office), provided detailed a number of agreements, involving deficiencies and failures to implement the special and differential treatment provisions favouring the developing countries, and needing remedies.

Several developing countries who spoke later supported this stand.

India insisted that before moving to other issues identified in the Geneva Ministerial Declaration, the preparatory process should give priority to issues of implementation of existing agreements, and
concentrate on the three sub-indents of para 9 of the declaration. While some aspects of the preparatory process could be delegated to the relevant subsidiary bodies, implementation issues requiring political sensitivity should be addressed at the General Council.

Of crucial importance was the element of Special and Differential treatment in the WTO accords -- time-limited derogations for longer transition periods and greater flexibility for certain obligations, and others for specific, but undefined, actions by developed countries under certain agreements while dealing with developing countries.

On the time-limited derogations, the preparatory process should evaluate the experience of developing countries over the past years, and determine whether the intentions of negotiators have been effectively translated into practice. In cases like that of the Textiles and Clothing agreement, there have been implementation in letter, but without achieving meaningful market access for developing countries. The second category of S & D, were in the nature of "best endeavour" clauses, and had been virtually ignored in implementation.

India cited in this regard the GATT BOP provisions (Art. XVIII:B) enabling QRs by developing countries for BOP reasons, and different from Art XII provisions (applicable to industrial countries),
specifically requiring assessment of adequacy of foreign exchange reserves, taking into account long-term development needs of a developing country. But in actual practice, (with the IMF providing both data and a judgement on adequacy), both XVIII:B and XII were being treated similarly. Similarly, despite the special provisions in Art. 15 of the Anti-Dumping agreement, instead of special consideration to be given before taking action, the special consideration had become one of targeting developing countries with repeated proceedings on the same commodity? In the same vein, the special provisions of Art 10 of the Sanitary and Phytosanitary (SPS) accord and Art XII of the Technical Barriers to Trade (TBT) have been hardly ever honoured in implementation, leading to imposition of standards by developed countries, beyond the technical competence of developing countries and without regard to their special development, financial and trade needs.

Again, such lack of understanding of problems of developing countries could be seen in the Agreement on Subsidies and Countervailing duties, which viewed as 'non-actionable' subsidies used by the developed countries, but made actionable those usually deployed by developing
countries. And while special dispensation was provided for low-income and least developed countries, these were still subject to countervailing measures, thus nullifying the benefits granted.

The GATS agreement, in Articles IV and XIX, called for measures to facilitate participation of developing countries in world trade. But in the implementation of GATS, there has been increasing pressure on developing countries to undertake more and more market access commitments, without adequate trade-offs in market access to them in sectors and modes of supply of interest to them.

The Dispute Settlement Understanding too had provisions for special and more favourable treatment to developing countries, but these remained largely as "best endeavour" clauses.

The Indian statement said that all these were emphasized lest there be any expectations that developing countries seeking solutions to their legitimate concerns in implementation should pay a price for redressal. The concerns of developing countries were the result of asymmetries and
imbalances in the agreements, and the "empty platitudes" of special and differential treatment have to be reviewed, to substantiate them.

"These should be done now, and delinked from any new negotiations, and should not be viewed as part of any new package, but a realistic realignment and balancing of earlier imbalanced package, so as to facilitate meaningful involvement of developing countries in the process mandated at the Geneva Ministerial."

On other issues, India highlighted the question of "food security" in relation to the further negotiations on agriculture, and said it would be "too simplistic" to suggest that agricultural liberalization envisaged would overcome problems of food security for developing countries with sizeable population. Regimes to curb trade-distorting subsidies used by some WTO members, if applied rigidly to developing countries that do not distort international trade but provide subsidies
to ensure adequate production of food and livelihood for the poor, would cause enormous hardships. Juxtaposed against the unacceptably high levels of subsidies of the major trading partners, any negotiations for further liberalization of international trade in agriculture have to take on board food security concerns of countries like India.

Other issues raised by India, included:

* Unilateral trade sanctions, investigations and trade actions maintained or imposed by some countries under their domestic law, contrary to their WTO obligations;

* Regional trading arrangements that were threatening global free trade;

* Imbalances and asymmetries in the TRIPs agreement which provide high protection to industrial products, but does not recognise rights of countries of origin in grant of patents on products using traditional bio-resources of developing countries, the higher protection under Art.23 available to wines and spirits of export interest to developed countries, but not products of interest to developing countries;

* Transfer of technology at fair and reasonable costs in relation to SPS measures, TBT measures, in electronic commerce;

Without access to advanced technologies at affordable costs, developing countries would find it difficult to discharge obligations under existing WTO agreements or participate in high technology thrust areas proposed to be added to the universe of multilateral trade disciplines.

* "Enabling Clause" for transfer of technology should be introduced into the WTO agenda - in terms of opening an environmental window or asking developing countries to conform to higher health and technical standards;

* National regulations on rules of origin threatening market access of developing countries, particularly in textiles;

Developing countries were being pressured to liberalize market access in areas of interest to the developed, while it was being delayed in areas of competitive advantage to developing countries -- textiles, movement of professional and skilled persons -- making it apparent that the balance of concessions promised in the multilateral trading system has not so far been achieved.

* Fresh negotiations under the agreement on agriculture and GATs should commence after 1.1.2000 as mandated;

* Future work in mandated reviews should be continued in the designated committees concerned in accordance with agreed time-table, and "there is no need to prepone (advance) consideration of these issues or prejudge them at this stage.

* The education process in the spheres of investment, competition and transparency in government procurement, as result of the work programme agreed at Singapore, is continuing and a wider and deeper understanding is necessary before it could be concluded that multilateral negotiations are necessary.

* In Trade Facilitation (also a Singapore programme), simplification of customs documentation and procedures were being handled by the World Customs Organization under the Kyoto Convention, and until this was completed there was no scope or likelihood of any substantial simplification by any country. The WTO must await completion of this work in the WCO.

* Environmental concerns were being used as disguised trade barriers and causes for unilateral actions by developed countries to restrict market access. Considerable work has been done in the CTE and this has highlighted that no commitments in the sphere of trade and environment could be undertaken, despite the initiative of some developed countries, unless developing countries first met their obligations under the Bio-Diversity Convention and Rio Principles. Until developed countries proved the genuineness of their intentions by engaging in commitments in the area of international environment conventions, no weight could be given to their professed interest in safeguarding the
environment through action limited to trade-environment interface.

The initiatives on new issues -- new round of industrial tariff reductions, high-level initiative on trade and environment, greater transparency in WTO functioning through greater involvement of 'stake-holders' or comprehensive new round of trade talks -- were premature, if it is intended to carry voluntary participation of developing countries, India insisted.

They were still in the process of implementing the Uruguay Round tariff cuts, and these will be completed only in 2000. The results of these reductions have to be assessed before launching negotiations for new commitments. Overloading the WTO agenda would not be productive and it
would be premature to talk of any comprehensive new round of negotiations or the induction of non-trade issues such as labour standards on the WTO agenda.

The implementation problems and built-in agenda should first be addressed, and trade made an instrument to promote development. The thrust for global free trade would be far more fruitful if ground realities of the world economy are fully understood and needs and problems of developing and least developed countries are taken on board. It was also too early to deal with the question of a "single undertaking", since the Council was only in the very early stages of the work programme given by the Geneva Ministerial.

Indonesia on behalf of the ASEAN, called for faithful implementation and said the problems they faced in agriculture, textiles and clothing, origin rules, anti-dumping and subsidies were similar to those expressed by India. The implementation and built-in agenda issues should be given priority.

Egypt, speaking for Africa, noted that Africa's trade share had been falling steadily, and this was a matter of serious concern to the region, and ought to be of the world community. There was need for faithful implementation of S & D provisions. He had heard a number of ambitious agenda proposals, but Africa would ask trading partners to have some realistic expectations. On market access, the African statement noted that products of export interest to the developed world, like computers and computer-chips were getting duty-free treatment, but those of export interest to developing countries faced high tariffs and tariff-escalation.

In a separate statement on its own behalf, Egypt agreed that everyone should resist protectionism, but suggested that there was need to be "sensitive" when preaching further dozes of liberalisation as a solution to those millions suffering from adjustment and financial crises. There were efforts to address labour standards at the WTO, while issues of movement of natural persons for delivery of services were being held up with little progress.

Uganda called for implementation of measures to give effect to the High-Level meeting on LDCs.