WTO Ministerial Section • Volume 4 • Number 3 • April 2000

Quad Offers Weak Starting Point for Confidence-building Package

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In the aftermath of the Seattle Ministerial Conference, which revealed the depth of many developing countries’ disappointment in the results of the Uruguay Round and the WTO as an institution, ‘confidence-building’ emerged as the new buzz word: measures would be taken to convince those whose faith was flagging that the system was responsive to their concerns. WTO Director- General Mike Moore was to report to Members on his efforts regarding all pending post-Seattle issues before Easter, and the General Council is expected to review the results on 3 May.

A proposal by influential WTO Members gives an indication of what is in store for that meeting. On 31 March, the United States, the European Union, Japan and Canada agreed on a ‘Quad Package on a WTO Work Programme’, which would result in virtually no change in least-developed countries’ situation within the multilateral trading system, and offers few concessions in other key areas of interest to developing countries. Quad members have been at pains to explain that the ‘package’ is an outline for discussion by WTO Members rather than a bottom-line offer, but it remains to be seen how much flexibility they are willing to exercise. Many think that no significant progress can be made on key issues without a broad-based round of new negotiations.

The package consists of two parts: proposals on implementation and enhancing transparency; and a draft decision on market access and technical assistance for least-developed WTO Members.

Transition Periods

Developing countries have sought, before and after Seattle, a general agreement on prolonging the grace periods before full compliance is expected of them for several WTO Agreements. The Quad Package contains no such blanket extensions. Instead, it suggests that ‘Members should be ready to act sympathetically and flexibly in response to duly substantiated requests from developing countries for an extension of transition periods’ under the Agreement on Trade-related Investment Measures (TRIMs) and the Agreement on Customs Valuation. The Agreement on Traderelated Aspects of Intellectual Property Rights (TRIPs) is not mentioned at all. Any extension requests would be considered on a case-by-case basis. As this process is in fact already underway in the Committee on Customs Valuation and the Council for Trade in Goods (see separate story on page 4), the Quad proposal arouses scant enthusiasm. At most, it offers the following specifically for LDCs: ‘In recognition of their capacity constraints, special consideration should be given to the extension of transitional periods for leastdeveloped countries under the Customs Valuation Agreement’. One way to reconcile developing countries’ demand for an acrossthe- board solution for expired transition periods and the Quad’s case-by-case approach could be to develop general guidelines for decision-making regarding extensions, but so far little has transpired on whether this would be acceptable to Members.

Three extra years could be granted, the Quad suggests, to leastdeveloped countries for the elimination of their existing measures that are inconsistent with the Agreement on the Application of Sanitary and Phytosanitary Measures ‘where such application is prevented by lack of technical expertise, technical infrastructure or resources’. Assistance could also be offered with regard to problems faced by developing country Members in international standards and conformity assessments. A Special Mechanism under the General Council could be instructed to ‘work out mechanisms designed to improve the effectiveness’ of the Marrakesh Ministerial Decision on mitigating possible negative effects of agricultural liberalisation on net food-importing developing countries.

Other Implementation Concerns

Beyond these proposals, the Quad notes that ‘an implementation work programme could be established in which different committees will consider issues relating to implementation raised by Members and report to the General Council’, which ’should include a point on implementation in its agenda’. This is a far cry from developing countries’ pre-Seattle demand for a Special Mechanism under the General Council to address the imbalances in existing WTO Agreements and their implementation. The work programme proposed by the Quad would deal with issues raised by any Member, and thus presumably provide an additional avenue for examining developing countries’ compliance with WTO rules, rather than focus exclusively on their unmet expectations rising from the Uruguay Round Agreements.

As one of its priorities, the Special Mechanism was to look into the question of expiring transition periods; other items included a review of special and differential treatment provisions in the WTO Agreements. The Quad Package does not address the latter issue, and it remains highly uncertain where in the system developing countries’ implementation concerns can be addressed in a comprehensive manner, or whether some of them will be addressed at all.

Fixing the Transparency Gap

Many WTO Members now downplay the role of institutional problems and decision-making procedures as a major cause for the failed Ministerial, but the subject is still on the WTO agenda. Director-General Mike Moore characterised a late March informal General Council session on internal transparency as ‘constructive, focused and practical’, saying it yielded ’some very serious ideas [Ö] on how we can improve our play’. At the meeting, most industrialised countries, as well as several developing countries, stressed that relatively minor changes would suffice to improve the inclusiveness of decision-making.

The Quad Package follows this line of argument, proposing that informal meetings ’should be broadly representative of the WTO membership at different levels of development and reflect the breadth of substantive views on the issue being discussed. Such meetings should be followed by open-meetings in which a report is made on progress achieved, and all members are given an opportunity to express their views. [Ö] Within the context of the new programme for capacity building and technical assistance, enhanced priority should be given to supporting developing country participation in negotiations, particularly LDCs’.

Some developing countries, however, clearly disagree. At the March General Council meeting, Pakistan, Cuba, Egypt, Uganda and Zimbabwe submitted a proposal for an ‘open-ended’ process, with all negotiations taking place in plenary sessions. A workshop for African trade policy officials and negotiators, convened by the Southern and Eastern African Trade Information and Negotiations Initiative (SEATINI) in late March, issued a strong call for a ‘reformed WTO’ that should ‘first and foremost be developmentoriented and based on transparency, inclusiveness and representativeness’. To achieve that goal, the workshop recommended that African countries focus on ‘ensuring full transparency and opportunity for full participation by all developing countries at all stages of negotiations and ensuring a Secretariat with equitable geographic representation’ (see also page 15).

The Quad Package also outlines some steps, which ‘could be considered’ to enhance external transparency. These include, ‘with a few limited exceptions’, the immediate derestriction of working documents, Secretariat background papers, meeting minutes and agendas, as well as panel reports; enhanced contacts and exchange of information between the WTO Secretariat and NGOs; more regular symposia and other forms of informal dialogue with civil society on a broader range of WTO issues; and a review of the guidelines for consultations with NGOs. Up to now, proposals along these lines have met with a cool response from many developing countries and the Secretariat, which clearly consider internal transparency a priority over external opening.

Market Access and Technical Assistance for LDCs

The need to improve the lot of least-developed countries within the multilateral trading system is the confidence-building measure that WTO Members have most widely agreed about. Accordingly, the Director-General has held consultations among Members on what concessions they would be willing to provide to leastdeveloped countries. Not very many, it transpires, if the Quad Package is anything to go by.

The greatest disappointment resides in the deliberately vague language of the ‘Draft Decision Establishing a Plan of Action in Favour of Least-Developed Countries and a Revitalised Program for Technical Co-operation’. In it, the four major trading powers propose that developed countries grant least-developed Members ‘enhanced market access by according and implementing tarifffree and quota-free treatment consistent with domestic requirements and international Agreements, under their respective preferential schemes for essentially all products originating in least-developed countries so far as they remain in that category’ (editor’s italics).

The italicised language gives the game away: ‘consistent with domestic requirements and international Agreements’ would allow developed countries to exclude concessions in such areas as textiles, where the phase-out of quotas is already bound under the Agreement on Textiles and Clothing and the corresponding domestic legislation of restraining countries. Equally deliberately, the draft decision does not define what ‘essentially all products’ would entail, leaving each Member free to interpret the wording in a way that would protect domestic producers from competition from ’sensitive’ LDC products, such as agricultural commodities. The requirement that the goods must ‘originate’ in leastdeveloped countries adds an administrative hurdle designed to ensure that no trans-shipment takes place.

And finally, the reference to developed countries ‘respective preferential schemes’ makes it clear that the duty- and quota-free access would remain in the realm of enhanced but non-bound unilateral trade concessions. Many LDC goods already enjoy such preferences, and would be little better off if the Quad draft decision were adopted. Although the initiative could be marginally helpful to some least-developed countries whose products currently remain outside Quad members GSP schemes, the many qualifications in the proposal would make it easy for developed WTO Members to restrict access whenever the need arose. In contrast, least-developed countries had demanded ‘bound dutyfree and quota-free market access conditions for all products from LDCs to developed countries’, as well as favourable rules of origin and the elimination of other non-tariff barriers.

The Quad’s own weak commitments, at least as they currently stand, have made many developing countries scornful of the Quad’s proposal that they also provide least-developed Members with enhanced market access ‘to the maximum extent possible’. In addition, some developing country Members, such as Brazil and Pakistan, have expressed concern about trade diversion if least-developed countries are granted significantly better access to industrialised country markets.

On technical assistance, the major problem with the Quad draft decision is its lack of funding commitments. Although the four suggest that Members agree to ‘establish an improved programme for capacity building and technical assistance undertaken by the WTO’, they only promise to ‘undertake to work to devote adequate resources for these efforts’ (editor’s italics), instead of the US$10 million increase in the WTO’s regular budget that Mike Moore had sought to improve the organisation’s technical assistance delivery. Short of a firm commitment on funding, it seems self-serving to commit to the promotion of a ‘better understanding and use of WTO rules so that recipients are able to exploit to a maximum the opportunities offered by the multilateral trading system and enhance the capacity of recipients to adopt and implement domestic laws and regulations to fulfil their WTO obligations and participate in the system’.

It is difficult to escape the conclusion that while the world’s leading trading powers eagerly grabbed the chance to ‘talk the talk’ of confidence-building and reform in the wake of the failed Ministerial Conference, they are no closer to ‘walking the walk’ than in the acrimonious pre-Seattle days.