Seattle 99 • Volume 3 • Number 5 • June 1999

The Elusive Seattle Mandate: What Will Members Negotiate?

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As the second preparatory phase for the Seattle Ministerial Conference - to be held from 30 November to 3 December - draws to a close, WTO Members’ objectives for the upcoming trade liberalisation talks are mostly clear. With more than 60 proposals tabled, they now face the challenge of reconciling opposing aims in a concrete negotiating mandate. The mandate will be adopted as part of the Seattle Ministerial Declaration, which Members are expected to start drafting in September.

Negotiations on agriculture and services are already mandated in the so-called built-in agenda, but Members are divided between those who want to limit the round to these topics and the implementation of existing Agreements and those who advocate a comprehensive round conducted as a ’single undertaking’, with negotiations on the built-in agenda, industrial tariff reductions and several so-called ‘new issues’ running concurrently and the results adopted simultaneously, as was done during the Uruguay Round.

No matter how broad or narrow the Seattle Round turns out, the negotiations are expected to be the most difficult trade talks ever held. There is near consensus on only one issue: the round should be concluded within a relatively short time, preferably three years. The following summary of recent developments attempts to map the lie of the land before Members start defining the substantive contents of the Seattle Round after their summer break. See also related articles on the G-8 Summit on page 3 and APEC on page 10.

Implementation of Existing Agreements

At a 7-8 June informal meeting of the WTO General Council, Members discussed a comprehensive ‘non-paper’ on implementation issues, which many developing countries led by India, Pakistan and Egypt want to be the major focus of the upcoming talks. Tabled by Zambia and co-sponsored by Jamaica, Kenya, Pakistan, Sri Lanka, Tanzania and Uganda, the 42-page paper reviews a number of problems - many of which have been highlighted in previous proposals - that have arisen in the implementation of WTO Agreements and suggests possible actions that could be taken to ‘make the system more responsive to the needs of developing countries’. The paper addresses market access concerns, particularly for textiles and agriculture products; developing countries’ trade liberalisation obligations; infant industry protection; trade restrictions undertaken for balance-of-payment reasons; safeguards and anti-dumping; technical barriers to trade; sanitary and phytosanitary measures; problems encountered in the implementation of the TRIPs, TRIMs and GATS Agreements; notification obligations; and shortcomings of the dispute settlement system. As the paper is too broad to be described here in detail, readers should request a copy from the sponsoring governments.

Revision Proposals

India has submitted four position papers, proposing revisions to the Agreement on Subsidies and Countervailing Measures, the Agreement on Sanitary and Phytosanitary Measures (SPS Agreement), the Agreement on Trade-related Investment Measures (TRIMs), and the Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade of 1994, which addresses anti-dumping measures.

In earlier interventions, many developing countries have focused on what they term as abusive recourse to anti-dumping actions by industrialised countries. India proposed raising the Antidumping Agreement’s de minimis margin from three to five percent for developing countries, and imposing a waiting period of at least one year before an import product can be re-investigated by anti-dumping authorities (WT/GC/W/200). Restricting antidumping actions is likely to be a major developing country priority in the Seattle Round, but it will not be easy to rewrite the rules: speaking to a group of business representatives on 16 June, US Commerce Secretary William Daley said there was ‘one issue we are not willing to negotiate: that is the anti-dumping rules. Much work remains on putting the existing WTO Anti-dumping Agreement into effect. It is extremely complicated, and the last thing we need is to reopen that Agreement.’

On the WTO Agreement on Subsidies and Countervailing Measures, India’s position closely resembled that of five Latin American countries at an earlier meeting, suggesting that the Agreement is currently skewed in favour of developed countries (WT/GC/W/201). India noted that subsidies favourable to developed countries (e.g. agricultural subsidies) are ‘nonactionable’ under dispute settlement procedures, and announced that it would push for the list of non-actionable subsidies to be expanded to include subsidies benefiting developing countries (see also Bridges Year 3 No.4, page 4).

In another position paper (WT/GC/W/ 202), India argued that arbitrary and restrictive application of SPS measures to developing countries’ agricultural exports was a major barrier to trade, and proposed revising the Agreement to provide longer timeframes for developing countries to comply with domestic SPS measures. In addition, India called for broader developing country representation on global standardisation bodies such as the Codex Alimentarius Commission, which sets international food safety standards.

The Zambian discussion paper on implementation problems proposes that, to be acceptable as a basis for WTO-consistent TBT or SPS measures, ‘a standard prepared by an international body shall be considered as an international standard only if (i) in the work on formulation of such a standard, an agreed minimum percentage of countries from different regions have participated in the technical work throughout the process relating to its adoption; and (ii) it has been adopted by consensus.’

According to India, the TRIMs Agreement should also be amended to extend the transition period for phasing out local content and export performance requirements on foreign direct investment projects beyond January 2000 ‘as the existing provisions come in the way of accelerating the industrialisation process in developing countries’.

One of the proposals contained in the Zambian discussion paper suggests that it would be ‘necessary to review the provisions of the [Trade-related Intellectual Property Rights (TRIPs)] Agreement relating to compulsory licensing in order to ensure that the governments of developing countries are able to grant such compulsory licenses to domestic industries for manufacture and marketing in cases where patented drugs, particularly those in the WHO list of essential drugs, are being sold at unreasonably high prices.’ Regarding the revision of TRIPS Article 27.3(b) on the patentability of plants and microorganisms, the paper notes that nothing in the Agreement bars countries that have genetic resources from entering into ‘contractual arrangements requiring companies using them for research purposes, to pay them fees for such use and royalties, if inventions are patented.’

Agriculture

A large number of countries support the Cairns Group objectives of reducing/eliminating government subsidies for agricultural production and exports. These proposals are mostly aimed at opening up the heavily protected agricultural markets of the EU, Japan, Korea, Norway and Switzerland. The latter continue to emphasise the ‘multifunctional’ nature of agriculture which would justify government support on environmental and social grounds.

While most developing countries have joined the battle against industrialised countries’ subsidy programmes, many of them will fight hard for the right to subsidise agricultural activities that address ‘non-trade concerns’, such as food security. A number of Latin American countries have argued that developing countries should be allowed to support efforts to improve marketing, transport, diversification of agricultural production and compliance with SPS standards. India and Pakistan in particular have emphasised that special and differential treatment provisions should cover developing countries’ agricultural support schemes. At the 7-8 June meeting, India pointed out that the current trade liberalisation ideology did not properly take non-trade concerns into account and argued for more flexibility in developing countries’ domestic support for agricultural producers (see also page 7).

Biotechnology: The US and Canada are determined to include biotechnology in the negotiations in one way or another (see Bridges Year 3 No.4, page 4). A recent US proposal (WT/GC/W/ 186) suggests that the existing framework in the WTO Agreement on Agriculture ’should be supplemented by additional disciplines, as needed, to address new challenges facing the agricultural sector’. This wording indicates that the US may attempt to conclude a ’stand-alone’ agreement or set of provisions on approval procedures and labelling for biotechnology products (see also related articles opposite and on pages 5 and 11). Earlier proposals and positions related to agriculture have been reported on in detail in previous issues of Bridges, see particularly Vol.2 No.8, page 1.

Services

Most delegations seem to agree that the services negotiations must be broad-based and cover all sectors and all modes of supply. At the June meeting, India noted that Article XIX.2 of GATS does provide some flexibility for developing countries to open fewer sectors and liberalise fewer types of transactions.

Australia, Chile and New Zealand proposed that the negotiations achieve higher levels of liberalisation in air and maritime transport, simplification of schedules and greater transparency in commitments, limitation of the scope and number of most-favoured-nation exceptions, and the development of rules on domestic regulation (WT/GC/W/204). They also emphasised that the negotiations should result in ‘more balanced commitments in all modes of supply’, including the movement of natural persons as service providers. The latter is a major developing country priority that has been particularly championed by Pakistan at prior preparatory meetings.

In related news, US companies involved in energy exploration, development, marketing and management have formed an Energy Services Coalition with the goal to include energy in the Seattle Round services negotiations. The companies are currently working with the US Trade Representative to identify the energy services sectors that are covered by the General Agreement on Trade in Services, and those that would need to be included in a separate annex. Energy is also one of the sectors that APEC countries are pushing for accelerated tariff liberalisation during the next round (see also under industrial tariffs below, as well as separate article on APEC on page 10).

Regional Trade Agreements

Both developed and developing countries have expressed concern about the unclear relationship between WTO rules and regional trade agreements (see Bridges Year 3 No.4, page 3). At the 7-8 June meeting, many Members agreed that the WTO Committee on

Regional Trade Agreements did not work properly, and that the whole issue of regional trade arrangements should be revisited. A Japanese proposal submitted on 22 June summarises these concerns. It suggests a clarification of a number of key concepts under GATT Article XXIV and GATS Article V:1, and strengthening examination procedures through the establishment of a review process, ensuring the enforcement of the results of the examination and establishing an obligation to notify economic integration liberalising trade in services.

Additional Issues

At the 7-8 June meeting, India stressed that negotiations on the built-in agenda (agriculture and services) should be separate from those on any other issues and not be conditioned on progress elsewhere. India also said it faced domestic problems and sensitivities about widening the scope of the negotiations beyond the built-in agenda.

Investment: In spite of an active citizens’ movement opposed to a multilateral investment agreement in many European countries and North America, the European Union and Canada staunchly support a future WTO investment treaty (see related article on page 12). As this issue of Bridges went to press, the EU was expected to submit a detailed proposal on how it envisages the investment issue to be handled during the Seattle Round.

The EU’s Eastern European member candidates, Chile, Japan, Costa Rica, South Korea, New Zealand and Switzerland also support the inclusion of investment in the Seattle Round. The US has said it would support ‘more modest’ negotiations on investment, which some observers think could mean clarifying and strengthening some provisions of the Agreement on Trade-related Investment Measures (TRIMs). Brazil has said it might support investment negotiations.

At the 7-8 June meeting, India, Pakistan and Uganda again argued that it would be premature to include investment in post-2000 negotiations as the Working Group on the Relationship between Trade and Investment established by the Singapore Ministerial Conference still had a large number of issues to address.

Competition policy: Most countries that support the development of WTO disciplines in investment are also in favour of negotiating competition policy rules as part of the new round. India, Pakistan, Egypt, Morocco and the ASEAN countries oppose the inclusion of this topic in the post-Seattle round, particularly as the WTO Working Group on the Interaction between Trade and Competition Policy has not yet concluded its work. The United States, which faces strong domestic pressure to keep its anti-dumping laws outside WTO disciplines, said in June that it would not support negotiations on competition policy because of disagreement between WTO Members. Anti-competitive practices such as trade remedy laws would necessarily come under scrutiny if the WTO were to embark on rule-making in this area.

Transparency in government procurement: This is the third of the so-called ‘new issues’ added to the WTO’s work programme at the Singapore Ministerial (the others are investment and competition policy). Countries are similarly split on government procurement as on the other Singapore issues, except that Australia and the US support the conclusion of an agreement. Countries in favour of starting negotiations on this issue emphasise that the future agreement would concern only the transparency of government procurement rules, not market access. Those against - led by India, Pakistan and Egypt - argue that the Working Group on Transparency in Government Procurement needs more time ‘to understand fully’ the concerns of developing and least-developed countries. The working group has a mandate to ‘develop elements for inclusion in an appropriate agreement’, but so far Members have raised a large number of issues without agreeing on elements to be forwarded to the Seattle Ministerial Conference.

Least-developed countries: Support is said to be growing for the European Union’s proposal that industrialised countries commit to zero tariffs for LDC products in Seattle (see Bridges Year 3 No.4, page 4). In related news, the General Council on 15 June adopted a waiver that will allow developing countries to extend preferential tariffs to LDC exports on a non-reciprocal basis. For more information see page 6.

Industrial tariffs: At the 7-8 June meeting, countries also engaged in a lively discussion on whether industrial tariff reductions should be included in the Seattle Round. The US, the European Union, Singapore, and Hong Kong reiterated their earlier support for their inclusion, while India said that unless developed WTO Members could demonstrate to developing countries that their concerns were being met with more than words, it would find it extremely difficult to embark on any talks on industrial tariffs.

New Zealand on 15 June submitted a proposal supporting comprehensive negotiations on ‘all tariffs on industrial products’ (WT/CG/W/211), taking the APEC accelerated tariff liberalisation (ATL) initiative as a starting point (for a detailed description of the ATL initiative, see a previous New Zealand paper outlining the proposals in the eight ATL product areas, WT/GC/138.Add.1). New Zealand suggested that negotiations on the eight ATL sectors - environmental goods and services; fish and fish products; forest products; medical equipment and instruments, energy; toys; gems and jewellery - should be concluded a matter of priority. If it proves impossible to achieve a ‘critical mass’ of support for ATL in advance of Seattle, New Zealand suggests that ‘the conclusion of agreements on these eight sectors - initially as plurilaterals representing a critical mass of global trade - be achieved as a matter priority within the post-Seattle negotiations. […] Members should aim to agree that these sectors would form the basis for an early-harvest element of the new round’.

Proposals promoting early liberalisation of the ATL sectors have previously been made by other APEC countries, including Australia, Singapore the United States. The latter faces considerable pressure from domestic environmental groups, which claim that the elimination of tariffs in wood and wood products would accelerate deforestation worldwide. The ATL initiative foresees industrialised countries phasing out tariffs by 2002 and developing countries by 2004.

Trade and environment: The European Union and Norway have submitted proposals on trade and environment (see Bridges Year 3 No.4, page 4). At the 7-8 June meeting, the EU reiterated its wish to see the environment feature prominently at the Seattle meeting; and Norway and Switzerland brought forward eco-labelling, processing and production methods (PPMs) and the relationship between WTO rules and multilateral environmental agreements as issues needing inclusion/clarification.

A number of developing countries warned that there was no need to duplicate the work of the WTO’s Committee on Trade and Environment, where these issues should be considered. Developing countries in general view trade and environment concerns as potential trade restrictions and green protectionism, and therefore oppose their inclusion in the new round. Cairns Group member Argentina has been particularly incensed about claims that environmental protection is one of the facets of agriculture’s ‘multifunctionality’, and should be recognised as a legitimate reason for subsidising production.

In related news, the Group of Eight (G-8) recently called for environmental considerations to be taken ‘fully into account in the upcoming round of WTO negotiations’, including ‘a clarification of the relationship between both multilateral environmental agreements and key environmental principles, and WTO rules’ (see separate article on page 3).

Other issues: There are a number of issues that currently seem sidelined in the preparatory process. No formal proposals have been put forward on the transparency and openness to public participation of the WTO as an institution, although many countries, including Canada, the EU and the US, have said in other contexts that making the WTO’s more responsive to civil society was one of their principal concerns. Specific proposals are also lacking on the controversial question of the relationship between labour issues and trade rules. In addition, it remains unclear how - or whether - reforms to the dispute settlement system will be included in the Seattle Round. The major initiatives in these areas have been described in previous issues of Bridges. See also article on the G-8 Summit on page 3.

Towards the Seattle Declaration

Three meetings remain in the ‘proposal-driven’ second phase of Seattle preparations: at meetings on 6 and 7 July Members will continue tabling and discussing proposals, as well as start considering future work. Observers expect that Members will agree to hold additional informal sessions before the last meeting of phase two on 28-29 July, when they should decide how they will go about drafting the Seattle Ministerial Declaration and adopt a meeting schedule for phase three of the preparations. Although phase three, scheduled to start in September, is supposed to be dedicated to narrowing the negotiating agenda and drafting the Ministerial Declaration, several WTO Members have reserved the right to submit further proposals after the end of phase two.

NGO Seattle Accreditation Procedures Adopted

The General Council also agreed on 15 June to use the same registration procedures for non-governmental groups wishing to attend the Seattle Ministerial Conference as those used for the previous WTO Ministerials. NGOs must supply in detail all the necessary information showing how they are concerned with matters related to those of the WTO. Groups that have been registered for and attended previous Ministerial Conferences or the March 1999 environment and development symposia, only need to join to their application ‘a shorter presentation of their activities and how they relate to those of the WTO. The reference of the meeting for which they have been granted registration and attended has to be mentioned. Requests for registration accompanied by the presentation of the NGO activities have to be sent by mail before 16 August 1999 to: External Relations Division, Centre William Rappard, 154 rue de Lausanne, 1211 Geneva 21, Switzerland. For more information, see http://www.wto.org/wto/ngo/ngojune.htm

Solution to Leadership Crises Under Consideration As this issue of Bridges went to press, a new proposal to bring the stale-mated process of seclecting the new WTO Director- General to a conclusion was under informal consideration. Australia proposed at the APEC trade ministers’ meeting in late June that Thailand’s current Deputy Prime Minister Supachai Panitchpakdi and New Zealand’s former PM Mike Moore each serve a three-year term, instead of one of them being appointed for four years. Both have said they could accept the proposal if WTO Members wished it. In spite of several months of deliberations, WTO Members have been unable to form a consensus around either candidate and the organisation has been leaderless since Renato Ruggiero stepped down in April. The General Council was to meet in early July to

http://www.wto.org/wto/minist/seatmin.htm This new addition to the WTO website contains all derestricted submissions made by Member governments in the run-up to the Seattle Ministerial Meeting. Please note that derestriction is done at the request of the government concerned.

Excerpted from a non-paper by Zambia, Jamaica, Kenya, Pakistan, Sri Lanka, Tanzania and Uganda.

The obligation to review TRIPs Article 27.3(b) was specifically included in the Agreement as a number of countries, particularly the developing countries, had expressed concerns at the provisions of the sub-paragraph, particularly that plant varieties must be protected either by patents or by a sui generis system. It may be necessary to clarify the provisions of the Agreement relating to patentability of plant varieties by providing that where a country grants protection to plant-based inventions, it could impose obligations on holders of rights: o To declare the origin of the materials used and to demonstrate the prior consent of the country of origin and, when relevant, of the indigenous or farming communities; and o To pay compensation to the country or the communities that had the material or the traditional knowledge used in the development of the new variety. It should further be clarified that the provisions in the Agreement providing that ‘microorganisms’ could be patented apply only to genetically modified micro-organisms and not those which are naturally available. Excerpted from a non-paper by Zambia, Jamaica, Kenya, Pakistan, Sri Lanka, Tanzania and Uganda.