6:06 AM Jul 18, 1994
KIM, IN GENEVA, PRESSES CANDIDACY FOR WTO HEADGeneva 15 July (Chakravarthi Raghavan) -- South Korea's Minister of Trade, Industry and Energy, Chulsu Kim was in Geneva Friday to press his candidacy for the post of Director-General of the World Trade Organization (WTO). As vice-Minister from 1984 to 1990, he was South Korea's chief Uruguay Round negotiator and had headed the Negotiating Group on GATT articles -- where he managed to make no enemies. He is the first of the candidates on the stumps to visit Geneva. Consultations on the selection of the WTO head are being conducted by the Chairman of the GATT CPs, Andras Szepesi (of Hungary). Countries have been given time till end July to present candidacies, and serious consultations on a choice are only expected in the autumn. Kim Friday called on Szepesi and GATT DG Peter Sutherland, and later met with groups of ambassadors of GATT delegations over lunch and dinner, to present himself as a serious candidate. Besides KIM, there are three other officially announced candidates: Brazilian Finance Minister Rubens Ricupero, Mexican President Salinas de Gortari and former Italian Trade Minister Renato Ruggiero. The Salinas candidacy, officially announced after Ricupero's, is known to have the backing of the United States, though not publicly so far. The presentation of his candidacy at the Ibero-American summit at Cartagena in June, and the manner in which a consensus endorsement of sorts was obtained there (when the Brazilian President and delegation had left due to death of his nephew and aide) created some misunderstandings and tensions among the Latin Americans. But much of this, particularly in terms of the relationships within the Southern Cone, is reported to have been cleared up now. Mexico, with the US and Canada, is a partner in the Nafta, and has now joined the Paris-based OECD, the organization of the rich industrial nations. It has withdrawn from the Group of 77 in New York. Though it was announced at that time that Mexico is also withdrawing from other exclusive developing country groupings, it does not so far appear to have done so in Geneva -- neither from the informal group of developing countries at the GATT nor from the Latin American and Caribbean group (Grulac) at UNCTAD and other UN agencies and organizations in Geneva. Some Grulac members, as well as other G77 members and those at the GATT informal group privately say this is anomalous but that it is for Mexico to make a decision as to where it belongs. Many developing countries think the WTO post should go to a candidate from their ranks. They note that the GATT post has been occupied since inception by Europeans. The IMF and World Bank, with whom the WTO is supposed to work closely, are headed respectively by Europeans and Americans. With developing countries now a large majority inside the WTO, based in formal decision-making on the one-country-one-vote principle, it is time the WTO is headed by a developing country personality, they argue. In such a context, Brazil may start with an advantage. It has been active within the developing country groupings. And Ricupero during his tenure in Geneva, as his country's Representative to the GATT, was active in the informal group of developing countries and has held offices of Chairman of the GATT Council and the GATT CPs. But ultimately, the selection would depend on the major's supporting or vetoing any particular candidate. While KIM is presenting himself in his own right, his and Korean expectations appear to be based on a deadlock developing over the other candidacies, and his emerging as a compromise. Some Japanese sources say that if there is a deadlock between the US-backed Salinas and EU-backed Ruggiero, and Ricupero also gets knocked out in this process, KIM could have a 50-50 chance as a compromise and Japan at that stage might back him. But the Nordics and New Zealand have indicated they too would field some compromise candidates. After his Geneva trip and return to Seoul, KIM plans visits to other capitals, beginning with the Asean countries, to canvass support. "We have presented our candidacy in all capitals, but it is too early to say about support," Kim said. Asked whether he had the backing or support of the United States, whose diplomats here have reportedly said Washington has reservations about the post being occupied by anyone from a developing country, KIM did not think this was an official American position. In pressing his candidacy, KIM said his first priority as head of the WTO would be for the WTO making a good start. The first order of business, he said, should be faithful implementation of results of the Uruguay Round and finishing the unfinished business such as in services, as well as tackling issues of trade and environment. The Korean Minister was hopeful of getting the support of other developing countries. South Korea as a member of the Group of 77 has generally taken a low profile. It is due to join the OECD sometime in 1996. But Kim did not think that this would come in the way of South Korea getting developing country support. The progress of South Korea was similar to the aspirations of the developing countries, he suggested. Half of Korea's foreign trade, he noted, was with developing countries. With his knowledge of the Korean experience in development and Korea's programmes of economic cooperation with other developing countries, he would be able to contribute something to the office of WTO head and to the cause of developing countries, Kim said. He noted in this connection that Korea had begun with a very low, $78 per capita, in 1962 and had now reached the current $7500 and Korea's experience would be valuable. There is considerable disagreement among economists on the nature of the Korean model. The World Bank has been trying to present the experience of Korea and other successful Far Eastern Economies (as earlier of Japan) as being in line with the Bank's own ideology or faith in a 'market friendly' State role. While acknowledging the Korean State had intervened in the economy, the Bank argues that Korean success would have taken place any way even without such intervention. Many economists outside the Bank dispute this and view the Korean model, as the earlier Japanese model, as one of active State role in promoting industrialization through an industrial policy framework and stress that neither Japan nor later South Korea would have achieved their present stage of industrial development without such a State role in promoting industrialization. But both groups of economists appear to agree that the Uruguay Round agreements (particularly those on TRIPs, Subsidies, TRIMs and other rule-making areas) foreclose, for other developing countries, several of the development policies, strategies and options that Korea and other Far Eastern Economies had followed. While the Bank uses this argument to press developing country governments to retreat from the economy, other economists suggest that the Bank (WTO etc) instead should press for developing countries being given greater leeway to follow an activist role to promote industrialization. Also, they say that while many of the Korean options have now been closed for other developing countries under the WTO accords, developing country governments could and should exploit the various loop-holes and options available to adopt an active interventionist role to promote industrialization, and not follow the laissez faire dogma of 'free trade or free market' or the Bank's 'market-friendly' stance. As a candidate for the WTO head, needing support of both the developing countries and the major industrialized countries who want to prevent any rising competitivity to them from a new group of Koreas, KIM, understandably perhaps, sidestepped questions on this debate and did not explain how the Korean experience would be relevant for other developing countries in the new WTO trade order. But he felt that the Uruguay Round had ended in a balanced way and that developing countries who had participated significantly in the Round had gained in that their concerns had been met -- such as over the Textiles and Clothing Agreement, and in ensuring special and differential treatment through longer transition periods. It is a compromise package, he stressed, adding that while they may not have gained all that they sought, the package did reflect the interests of developing countries and gave them more benefits than the Tokyo Round did, Kim added. Kim did not agree with the view that the overall outcome was imbalanced, with very little gain for developing countries in terms of market access, while developing countries have had to undertake much greater obligations in terms of GATT rules and of the TRIPs accord. At his informal meetings with groups of GATT delegates, KIM was reportedly asked about his views on the new issues, particularly trade-social standards linkage (being pressed by the US and the EU). Kim is reported to have responded that the issue would have to be addressed, but after some time, when consensus could be built on it.