Seattle 99 • Volume 3 • Number 7 • August 1999
No Agreement in Sight on Seattle Ministerial Declaration Contents
Intense negotiations are currently taking place to come up with a draft of the Ministerial Declaration that will launch a new round of multilateral trade negotiations in Seattle in November. So far, two draft outlines have emerged, one by the Chair of the General Council - submitted for consultation under his own responsibility - and another by Cuba, the Dominican Republic, Egypt, Honduras, India, Indonesia, Malaysia and Pakistan.
The Chair’s outline proposes that the objectives for the trading system should include, inter alia, ‘meaningful special and differential treatment for developing countries’; fuller integration of least-developed countries in the multilateral trading system; ‘recognition of concerns in connection with implementation of existing commitments and importance of implementing them in letter and spirit’; commitment to timely completion of mandated reviews; and, a ‘reaffirmation of the need to make international trade and environmental policies mutually supportive’.
The outline’s section on the future WTO work programme has two headings: ‘implementation’ and ‘new negotiating round’. Only agriculture and services appear firmly on the agenda, all other items are bracketed. Also bracketed are key elements of the new round’s scope (single undertaking, possibility of early provisional results, etc.) and potential decisions in Seattle, which could include immediate action on ‘certain implementation problems’, a comprehensive new action plan for least-developed countries, technical co-operation, the Dispute Settlement Understanding review, transparency in government procurement, electronic commerce, WTO transparency, a new technology agreement, and a decision regarding the accelerated trade liberalisation initiative for industrial goods.
The ‘rival’ proposal from the eight developing countries is organised differently. After preambular paragraphs, its implementation section calls for an ‘assessment of implementation’, and immediate decisions taken in Seattle with regard to specific agreements, including accelerated integration of textiles into the multilateral trading system. It adds follow-up to the 1997 highlevel meeting on least-developed countries as a separate heading, and groups the Singapore issues (trade and investment, trade and competition policy, trade facilitation and transparency in government procurement) under the heading ‘continuation of the study process on issues initiated in Singapore’, thus indicating that these issues would not be included for negotiation in the Seattle Round. On the other hand, the paper proposes negotiations on three new initiatives to make the trading system more supportive of the development process: access to technology, trade and finance, and the relationship between trade, debt and commodity prices. General Council Chair Ali Mchumo said he hoped to submit a first draft Ministerial Declaration to WTO Members on 4 October. This document is expected to be considerably more detailed than the ‘bare-bones’ outlines made public so far.
Implementation of Existing Agreements
Trade ministers of the G-77 group of developing countries on 16 September identified implementation of existing agreements as a priority for the Seattle Round (see page 6; earlier proposals dealing with problems encountered by developing countries due to the non-implementation of provisions in their favour have been described in previous issues of Bridges).
On 17 September, the United States spelled out its view of how to handle implementation issues (WT/GC/W/323). First, the review should focus on effective implementation of obligations by agreed deadlines, with ‘all pertinent implementation issues and problems to be inventoried by each subsidiary body for their respective decisions or agreements by no later than 31 July 2000′. This approach would remove the implementation of existing commitments from the Seattle Round and make it an essentially technical exercise overseen by the WTO committees responsible for the different Agreements. At Seattle, ministers should adopt the following decisions with regard to implementation:
o Where technical assistance needs are at issue, ministers should instruct the General Council to ensure that the identification and addressing of such needs are co-ordinated through whatever mechanisms may be established in follow-up to any decisions taken at Seattle with respect to improved coherence in technical assistance and capacity building.
o Where transition periods other than those that expire as of 1 January 2000 (e.g., industrial export subsidies maintained by developing- country Members) are at issue, ministers should take or authorise whatever steps may be necessary to ensure that there is a sufficient flow of information concerning progress and specific plans being undertaken by individual Members to come into compliance with applicable deadlines.
o Where notification obligations are at issue, ministers should take, approve or endorse appropriate steps to streamline obligations and procedures for submitting and reviewing notifications, consistent with the principle that any such steps should not materially detract from the underlying objective of transparency or the substance of legal obligations set forth in relevant agreements and decisions.
Developing Country Positions on Agriculture
A detailed proposal was tabled by Indonesia, Malaysia, Philippines, and Thailand on 23 September on ‘Special and Differential Treatment for Developing Countries in World Agricultural Trade and the Mandated Negotiations’ (WT/GC/W/331). The paper urges WTO Members to conduct the negotiations in the ‘letter and spirit’ of GATT Article XXXVI, which recognises the need for ‘positive efforts designed to ensure that less-developed contracting parties secure a share in the growth in international trade commensurate with the needs of their economic development’ and the Enabling Clause, which provides that developing WTO Members shall not be required to make concessions that are ‘inconsistent with their financial and trade needs’.
Fulfilling these provisions would not only mean longer timeframes for the implementation of commitments, which must continue to be given to developing countries, but also differentiating the ‘nature and substance of their commitments’. For instance, while the negotiations should result in the ‘immediate elimination of all forms of export subsidies’, developing countries should be able to continue using ‘the existing flexibilities’ offered by Article 9.4 of the Agreement on Agriculture. Indonesia, Malaysia, Philippines and Thailand also warn that the negotiations ‘cannot and will not conclude without effective disciplines on export credits’.
Similarly, the proposal calls of elimination of developed countries’ ‘blue box’ domestic support measures, and a review of the criteria for ‘green box’ support measures ‘to ensure that they meet the basic requirement that they have no or at least minimal trade distorting effects on production and trade, and that they adequately address the trade, financial and development needs of developing countries’. For developing countries, special and differential treatment should result in the provision of ‘flexibility to pursue WTO-consistent policies and strategies that would allow them to develop their potential in agriculture and address their non-trade concerns, including food security, rural development and poverty alleviation’.
On market access, Indonesia, Malaysia, Philippines and Thailand note that ‘commitments by developing countries should be directly related to the outcome of reform commitments by developed countries on domestic support and export subsidies’. They also propose that developed countries ‘commit the unconditional binding of all GSP schemes for agricultural tariffs in the negotiations’.
Traditionally, the most radical calls for agricultural liberalisation have come from the Cairns Group (see separate item on page 7), but a recent proposal by MERCOSUR countries Argentina, Brazil, Paraguay and Uruguay, as well as Chile, goes even further: in addition to the elimination of export subsidies and reductions in domestic support, the paper calls for the negotiations to aim at ‘bringing trade in agricultural products under the same WTO rules and disciplines as trade in other goods’ and proposes that Members agree to ensure that the next market access negotiations result in a ‘tariff-only regime at commercially meaningful levels of protection and volumes under eventually remaining tariff-rate quotas are continuously and substantially increased in such a manner that, by the end of a specified period, they are no longer necessary’ (WT/GC/W/335). Another proposal calls for the elimination of the special safeguard mechanism (WT/GC/W/336), and a third for disciplining state trading enterprises and marketing boards.
EU Takes a Hard Line
Agriculture ministers of the European Union on 28 September adopted a common negotiating position that noted the need to take an ‘offensive line’ at the WTO agriculture negotiations to ensure, inter alia, that the EU could maintain and develop the ‘European model of agriculture with its multifunctional characteristics and with high quality and safety standards; placing market liberalisation in a setting which brings international recognition of the constraints imposed on European farmers and agricultural products and does not call into question the principle of the Community preference’.
The ministers affirmed that the ‘Peace Clause’ and the ‘Special Safeguard Clause’ had ‘proved to be very useful instruments in the implementation of the Uruguay Round’ and that similar instruments would be needed in the future. They also said it was essential ‘to maintain the balance of the present elements of the Agreement on Agriculture, in particular those which concern modalities relating to domestic support’. They directed the European Commission to negotiate ‘reductions in support provided that, in particular, the concept of “blue and green” boxes will continue’.
The ministers stressed the need for ‘an appropriate balance’ between trade and non-trade issues, particularly with regard to ‘the multifunctional role of agriculture including environmental protection, safety and quality of food and animal welfare’. Direct aid measures with no or minimal trade impact ‘must have an important role’ in ensuring that progress on trade issues ‘does not damage the ability of those employed in agriculture to supply public goods, in particular as regards the environment and the sustained vitality of rural areas’.
Biotechnology
In a veiled allusion to the beef-hormone dispute and transatlantic tension over genetically-modified organisms, EU agriculture ministers said the Union ’should seek solutions which assure consumers that the WTO will not be used to force onto the market products about whose safety there are legitimate concerns and which allow the European Union to establish the appropriate level of protection. Without prejudice to the provisions of the disputes settlement procedure, it would be useful to obtain clearer general recognition of the precautionary principle’.
The United States has submitted a proposal that calls for ensuring that trade in biotechnology products is based on ‘transparent, predictable and timely processes’, but is still working on a more detailed negotiation position on the issue, particularly with regard to labelling. The US farm lobby opposes a Canadian proposal to set up a working group on biotechnology, preferring clarifications to the Agreement on Agriculture and the SPS Agreement that would state that genetically engineered products are subject to existing WTO regulations. Japan is reportedly seeking the establishment of an expert group to study the safety and quality of genetically-modified organisms, but has not yet submitted a formal proposal on the issue.
Developing countries have not put forward positions regarding biotechnology in the context of agriculture or sanitary regulations. Several among them have, however, called for modifying the TRIPs Agreement’s Article 27.3(b) to exclude all living organisms and their parts from patenting obligations (see next page. See also related article on the biosafety protocol negotiations on page 9). Developing countries have repeatedly called for the negotiation of disciplines to prevent excessive recourse to anti-dumping and safeguard actions. Colombia has proposed that special and differential treatment in the area of anti-dumping would require making mandatory the Anti-dumping Agreement’s Article 9.1 on the application of ‘duty less than margin’ and Article 15 on the need explore possibilities of constructive remedies instead of applying anti-dumping duties ‘where they would affect the essential interests of developing country Members’. It also suggests that if imports from a developing country amount to less than seven percent of the overall imports of a given commodity, they should be considered ‘negligible’ and thus safe from anti-dumping duties. In addition, the Colombian paper proposes changes to calculating dumping margins (WT/GC/W/315).
Egypt has also called for making Article 15 language ‘more comprehensive, operational and mandatory’; amending problems arising from fluctuating currency rates during dumping investigations; and adding new, detailed provisions on anti-circumvention (WT/GC/W/324). Guatemala has suggested redefinition of ‘like product’ in the Antidumping Agreement’s Article 2.6, which currently allows countries to consider ‘functional similarity or use’ as criteria (WT/GC/330). Political coalitions of developing countries, such as the G-15 and the G-77 have also issued strong calls for anti-dumping reform.
The opposition will be formidable, however. There are no industrialised country champions for the cause and the US is loud and clear about its intention of keeping anti-dumping and countervailing duty laws off the negotiating table. The US also opposes WTO negotiations on competition policy largely because these would involve trade remedy laws. Japan, Korea and the European Union have indicated willingness to include antidumping and countervailing duties in the Seattle Round, but this is not a priority issue. Korea’s WTO Ambassador Man Soon- Chang recently called the chances of getting anti-dumping reform on the negotiation agenda a ‘long, hard and uphill battle’ (see separate article on page 8).
A similar uphill battle faces developing countries in their efforts to improve the implementation of the Agreement on Textiles and Clothing. Developing country trade ministers on 16 September urged ministers to ‘address and resolve’ the question of implementation in Seattle, noting that the ‘non-realisation of benefits by many developing countries in areas of interest to them has resulted from the failure of major trading partners to fully and faithfully meet their obligations in these areas, particularly textiles and clothing’ (see page 6). The United States has said that it will not allow the re-opening of the Agreement on Textiles and Clothing and will not consider accelerating its liberalisation schedule in items covered by the Agreement.
Investment and Industrial Tariffs
The European Union and Japan are the most fervent supporters for developing WTO disciplines on investment. Canada, however, appears to be have lost some of its interest, and the US - after moths of hedging - seems to have ruled out investment negotiations during the Seattle Round. With a few exceptions, developing countries are unwilling to enter such talks, which they fear would hamper governments’ ability to set investment rules to support development policy. Non-governmental groups in the North and South are against investment negotiations, which they see as a threat to domestic health and environmental regulations, as well as a step for a corporate takeover of the global economy.
On 15 September, the US tabled its long-awaited paper on industrial tariffs (WT/GC/W/320). According to the proposal, the objective of the WTO industrial tariff negotiations should be to ‘maximise opportunities for achieving market openings and make more uniform the structure of tariff bindings of all WTO Members, building upon the Accelerated Tariff Liberalization initiative (ATL) which will be finalised by the time of the 1999 Ministerial’. Members should ’seek the interim implementation of results to be considered as an integral part of the overall balance of market access concessions to be determined at the conclusion of the new negotiations’ (see related article on page 7). Conservation groups worldwide oppose the ATL initiative because it includes tariff elimination for forestry products, which the groups say would amount to a ‘free logging agreement’ and thereby increase deforestation.
TRIPs
Colombia has proposed extending the moratorium on non-violation complaints in the TRIPs Agreement, and further developing Article 7 ‘in order to make it operational and ensure the transfer of technology on fair and mutually advantageous terms’. Both proposals were also backed by African trade ministers when they met in Algiers (see page 8), as were other proposals put forward by Kenya on behalf of the Africa Group in a comprehensive paper on TRIPs (WT/GC/W/302). This paper was warmly praised by a large group of non-governmental organisations, which particularly applauded the proposal that the review of TRIPs Article 27.3(b) should ‘clarify that plants and animals as well as micro-organisms and all other living organisms and their parts cannot be patented, and that natural processes that produce plants, animals and other living organisms should also not be patentable’ (see also Bridges Year 3 No.6, page 7).
Labour
Developing countries unanimously oppose any discussion, let alone negotiation, on labour standards in the WTO (see, for instance, the G-77 statement on page 6). Most industrialised countries have skirted the issue through vague recommendations on increased collaboration between the WTO and the ILO Secretariats. The United States has called for a ‘forward work programme’ to address issues relating to labour standards, and is expected to submit a formal proposal on the issue shortly. Under Section 131 of the US Uruguay Act, the administration must seek the establishment of a working group to ‘explore the linkage between international trade and internationally recognised workers’ rights’. The US may get a hand in this endeavour from the United Kingdom: UK Secretary of State for Trade and Industry Stephen Byers said on 24 September that his government supported the establishment of a joint WTO-ILO working forum ‘to look at the issues involved, to better understand the concerns of all countries and to study the impact of greater trade liberalisation on labour standards’.