Denne er svært lang, men også (mener jeg) svært interessant. De som
ikke har tid til å lese hele, kan lese oppsummeringen på begynnelsen.
jonivar
----- Forwarded message from Martin Khor <mkkp@pd.jaring.my> -----
From: "Martin Khor" <mkkp@pd.jaring.my>
Date: Sat, 2 Jun 2001 14:20:29 +0800
Subject: [StopWTORound] Martin Khor's speech G15 Ministers mtg
TWN INFO SERVICE ON WTO ISSUES
2 June 2001
From: Martin Khor (Third World Network)
Dear friends and colleagues,
Reproduced below is the statement that I presented at the Meeting
of the Trade and Economy Ministers of the Group of 15 developing
countries that was held in Jakarta, Indonesia on 27 June 2001.
The presentation was made at the Opening Session, chaired by
Indonesia's Minister of Trade Mr. Luhut. Other speakers at the
session were Mr Ricupero (UNCTAD secretary general) and Mr,
Mendoza (deputy director general of WTO).
The statement deals the present situation facingloping countries at
the WTO and the multilateral trading system. It covers:
-- the disappointments of developing countries and their implementation
problems;
-- why the new issues and the New Round being proposed by developed
countries for the WTO's ministerial conference are inappropriate and
should not be accepted.
-- even without a New Round the WTO agenda for the next years is already
very full, so a New Round is not needed for the WTO to have momentum.
-- conclusions on whyand how the WTO should change its operating
principles towards development needs and principles. WTO Members
should take action against measures or proposals that are
"development distorting" rather than those that are "trade distorting."
With best wishes
Martin Khor (TWN)
STATEMENT BY MARTIN KHOR (DIRECTOR, THIRD WORLD NETWORK)
ON THE MULTILATERAL TRADING SYSTEM
Presented at the Group of 15 meeting of Trade and Economic Ministers,
Jakarta 27 May 2001
1. THE MULTILATERAL TRADING SYSTEM AT THE CROSSROADS
The multilateral trading system, and the WTO, are at a crossroads.
Decisions made this year at the WTO as we approach Doha, and at Doha itself,
will have an important effect on which direction the trade system will head.
The most important of the decisions is whether the next few years will see
the WTO Members doing their best to rectify the problems and imbalances in
the rules and system, or whether the proposal for a "new comprehensive
Round" is accepted, in which case more new issues are added to the WTO which
will distort the trading system and add on even more to the existing
imbalances.
Five to six years after the WTO's establishment, it is time for an
assessment of the Uruguay Round's results and for reviewing the future shape
of the trade. The old GATT system dealt with trade in goods. There were
imbalances even in the system, as sectors of export interest to developing
countries remained highly protected, particularly agiculture and textiles.
In fact developing countries had agreed to subsidise the developed countries
which had asked for time to adjust.
The developing countries' main expectation of benefit from the Uruguay Round
was that at last these two sectors would be opened to their products.
However they both remain closed six years after the Round ended.
In agriculture, tariffs of many agriculture items of interest to developing
countries are prohibitively high (some are over 200 and over 300 per cent).
Domestic subsidies in OECD countries have risen from US$275 billion (annual
average for base period 1986-88) to US$326 billion in 1999 (according to
OECD data) instead of declining as expected as the increase in permitted
subsidies more than offset the decrease in subsidy categories that are under
discipline in the Agriculture Agreement.
In textiles, only very few items which the developing countries export have
been taken off the quota list, even though more than half the implementation
period has passed. According to the International Textiles and Clothing
Bureau in June 2000, only a few quota restrictions (13 out of 750 by the US;
14 out of 219 by the EU; 29 out of 295 by Canada) had been eliminated;
this raises doubts whether all or most of the quotas will really be removed
by 2005.
The developed countries have not lived up to their liberalisation
commitments, yet they still proclaim that it is unquestionably beneficial
for developing countries to liberalise their imports and investments as fast
as possible. Developing countries are asked to bear for a little while the
pain of rapid adjustment which is surely good for them after a few years,
whereas the developed countries which advocate this policy themselves ask
for more time to adjust in agriculture and textiles which have been
protected for so many decades.
Implementing their obligations under the WTO Agreements have brought many
problems for developing countries. These problems include the prohibition
of investment measures and subsidies, making it harder to encourage domestic
industry; import liberalisation in agriculture, threatening the viability
and livelihoods of small farmers whose products face competition from
cheaper imported foods, many of which are artificially cheapened through
massive subsidy; and the effects of a high IPR regime that has led to
exorbitant prices of medicines and other essentials, to the patenting by
Northern corporations of biological materials originating in the South; and
to higher cost for and lower access by developing countries to industrial
technology. These problems raise the serious issue whether developing
countries can presently or in future pursue development strategies
(including industrialisation, technology upgrading, development of local
industries, food security and maintainence of local farms and agriculture,
and fulfilment of health and medicinal needs).
These problems arise from the structural imbalances and weaknesses of the
WTO Agreements. There is now an urgent need to rederess the imbalances and
problems. Surely the WTO was not created with the intention to hurt the
majority of its Members or deprive them of development. The developing
countries have put forward their problems of implementation and their
proposals for redressal in the WTO and a summary is in paras 21 and 22 of
the pre-Seattle draft Ministerial Text of 19 October 1999. These requests
have been repeated many times in the WTO General Council special sessions on
implementation and in various Committees and Councils. Unfortunately the
developed countries have so far not responded positively. Their attitude
seems to be that the developing countries entered into legally binding
commitments and must abide by them however painful; any changes requires
new concessions on their part. Such an attitude does not augur well for the
WTO, for it implies that the state of imbalance will have to remain, and if
developing countries "pay twice" or "pay thee or four times", the imbalances
will become worse and the burden more intolerable.
The proposals for a new comprehensive round to be launched in Doha, if
accepted, would be equivalent to making developing countries pay twice,
thrice or four times. The heart of the proposed "comprehensive" New Round
is the introduction for negotiations for new agreements in investment,
competition and transparency in government procurement. There is also a
proposal for a new round of industrial tariff cuts for all countries. There
would also be future discussions or even negotiations on environmental
standards and labour standards.
It is claimed by the proponents that such a New Round would be especially
beneficial to developing countries. Nothing could be further from the
truth. Developing countries are told their requests on implementation
problems and on getting greater access in the North for agriculture and
textiles will be considered in the New Round, meaning that they have to
accept the entrance of the new issues into the WTO. But new agreements and
obligations in these new areas would be very detrimental to developing
countries, which will find even more of their development options closed
off; and at the same time (given the poor record of the North in not
keeping their commitments) there is no guarantee at all that the
implementation problems will be resolved or that there will be really more
meaningful access to Northern markets in agriculture, textiles and other
sectors.
2. WHY BRINGING IN THE PROPOSED NEW ISSUES INTO THE WTO IS INAPPROPRIATE
The proposals for bringing in the new issues (investment, competition,
procurement) through a New Round are inappropriate for the following
reasons:
(a) The WTO is a multilateral trade organisation that makes and enforces
rules.
It should stick to its mandate for dealing with trade issues.
(b) Principles (such as transparency, national treatment) and operations,
that were created for a regime dealing with TRADE issues may not be suitable
when applied to NON-TRADE issues.
(c) Developed countries would like to bring many non-trade issues into WTO,
not because it would strengthen the trade system, but because they would
like to make use of the enforcement system of WTO (ie the ability to bring
countries to the dispute settlement system to WTO and impose a trade
sanction).
(d) Therefore many new non-traditional non-trade issues are proposed to be
brought in, through the process of Ministerial Conferences, such as at Doha
in November 2001. The issues include investment, competition, government
procurement, labour and environment.
(e) If these non-trade issues are brought into WTO, and WTO principles as
interpreted by developed countries are applied to them, developing countries
will be at great disadvantage, and would lose a great deal of their economic
sovereignty, and their ability to make national policies of their own
regarding economic, financial, social and political issues.
(f) During the Uruguay Round, the developed countries already brought in new
issues: intellectual property, services and investment measures. These
agreements (TRIPS, services, TRIMS) are already causing many serious
problems, giving rise to the "Implementation Issues." Prof. Jagdish
Bhagwati, the doyen of free-trade economists, and advisor to the GATT
director general Arthur Dunkel during the Uruguay Round, has recently
published in the Financial Times that it was a great mistake to have
introduced intellectual property into the WTO as it is not a trade issue,
and has distorted the trade system, against the interests of developing
countries.
(g) The developed countries' real aims are to enable their big corporations
free entry into the markets of developing countries. Governments in the
South lose the ability to regulate the entry and operations of foreign
firms, and to give preferences to locals in policies or contracts. This is
the aim of the investment, competition and procurement issues. On the other
hand, the labour and environmental standards issues could lay the ground for
new forms of protectionism against developing countries' products and firms
through high standards. The introduction of these new issues is the essence
of what the developed countries mean by launching a "comprehensive New
Round." The new issues is what makes a New Round new for them. They give
the wrong impression that without these new issues, the WTO will lose
dynamism or have nothing to discuss. But this is not true as the WTO agenda
is already full even without the new issues.
3. EVEN WITHOUT NEW ISSUES, THE PRESENT AGENDA OF WTO IS VERY FULL
In reality the agenda of the WTO for the next several years is already very
full. The items already include:
(a) Problems of implementing the existing agreements. This item is insisted
on by developing countries, so that current inequities can be rectified,
otherwise the WTO will not benefit them. There are many discussions going
on and which will go on for the next many years.
(b) The "built-in agenda" of agriculture and services negotiations. These
are big areas which will occupy the attention of negotiators for several
years.
(c) The mandated reviews of agreements such as in TRIPS and TRIMS.
(d) Discussions in working groups (including on investment, competition,
government procurement) and committees (such as trade and environment).
(e) The normal work of the WTO and its many committees, its trade reviews,
and the dispute cases.
4. REASONS WHY THERE SHOULD NOT BE A "COMPREHENSIVE NEW ROUND", OR WHY THE
NEXT STAGE OF NEGOTIATIONS IN WTO SHOULD NOT INCLUDE "NEW ISSUES."
The new issues should not be on the agenda of the WTO's next stage of
discussions and negotiations in the next few years. Therefore the Doha
Ministerial should not launch a New Round with New Issues because:
(a) Introducing new issues into the WTO will distract from the other work of
WTO dealing with trade and other existing issues as listed above.
Developing countries do not have the manpower and financial resources to
cope with negotiations on new issues as well as the other items on the
agenda.
(b) The "new issues" are not trade issues and do not belong to the WTO. If
these issues are to be discussed internationally, other more appropriate
venues should be found for them. If they are nevertheless brought into the
WTO, they will lead to a distortion of the multilateral trade system, to the
detriment of world trade. Therefore developed countries should not seek to
bring in these issues, for their own narrow self-centred interests (i.e. to
get advantages over developing countries and getting these enforced through
the WTO's dispute settlement mechanism). By seeking to do so, they are
destabilising the multilateral trading system.
(c) Developing countries will be severely disadvantaged and their options
for economic, social and development policies would be severely constricted,
should these New Issues enter the WTO. They would largely be unable to
take measures to boost the conditions and prospects of local firms, or to
manage many aspects of their macroeconomic, financial and development
policies, or government procurement policies.
(d) The WTO must stick to trade issues, which have a legitimate place within
a system of multilateral trade rules, and these rules and the system must
primarily be designed or re-designed to benefit developing countries, which
form the majority of the WTO membership. For Doha and future Ministerials,
it must be very clear that for issues to be brought into the WTO, they must
meet strict criteria, such as that:
* The issue is a trade issue appropriate for a system of multilateral trade
rules;
* The WTO is the appropriate venue, and there are no venues that are more
appropriate.
* The issue is sufficiently "mature" in that Members have an understanding
of it and how it relates to WTO and to their interests.
* If brought into the WTO, the issue (and how it will be interpreted) will
clearly be to the interests of developing countries, which are the majority
of the membership.
* There must be a consensus of all Members that the issue should be brought
in, and how it should be brought in. And this should be a genuine consensus
based on a full understanding by all Members which are allowed to
participate fully in the decision-making process in Geneva and at the
Ministerial Conference itself.
The following is a brief analysis and proposed positions that developing
countries can take on investment, competition and procurement.
5. INVESTMENT
The main proponents of an investment agreement would like international
binding rules that allow freedom of foreign investors the rights to enter
countries without conditions and regulations, and to operate in the host
countries without most conditions now existing, and be granted "national
treatment" and MFN status. Performance requirements and restrictions on
movements of funds would be prohibited. There would also be strict standards
of protection for investors's rights, in relation to "expropriation" of
property. (A wide definition could be given to expropriation; the NAFTA
experience is worth noting).
Due to the unpopularity of this extreme model, the major proponents are now
offering watered-down versions, such as a GATS type approach; a
plurilateral apporoach; a multilateral agreement confined to transparency
in the first stage; and a bridging approach (continue discussion for two
years then upgrade to negotiations for an agreement automatically after
that). These step-by-step approaches are aimed at getting Members to agree
to the concept that investment rules belong to the mandate of WTO; and then
to draw them into an agreement which appears not to be so harmful and where
there is some space to make choices; and then later on to pressure them to
liberalise more and more in terms of sectors and depth of policy measures.
It should be recognised that the watered down versions are only shifts in
tactics and not in the ultimate goals. Once an initial agreement with
limited scope and commitments is obtained, pressure will be applied to widen
the scope and deepen the commitments in subsequent rounds of negotiations.
An international agreement on investment rules of this type is ultimately
designed to maximise foreign investors' rights whilst minimising the
authority, rights and policy space of governments and developing countries.
This has serious consequences in terms of policy making in economic, social
and political spheres, affecting ability to plan in relation to local
participation and ownership, balancing of equity shares between foreign and
locals and between local communities, the ability to build capacity of local
firms and entrepreneurs, etc. It would also weaken the bargaining position
of government vis-à-vis foreign investors (including portfolio investors)
and creditors
Proposed Position: The position for developing countries to take prior to
and at Doha could be that:
(a) Investment is not a trade issue, and thus bringing it within the ambit
of WTO would be an aberration and could cause distortion to the trade
system. It is certainly not clear that the principles of WTO (including
national treatment, MFN) that apply to trade in goods should apply to
investment, nor that if they apply that it would benefit developing
countries. Traditionally developing countries have had the freedom and
right to regulate the entry and conditions of establishment and operation of
foreign investments; restricting their rights could cause adverse
repercussions.
(b) The discussions in the working group on trade and investment have not
been complete or conclusive. The implications of for development of an
investment agreement, of whatever type, have not been fully discussed nor
understood.
(c) Therefore there cannot be any decision in the WTO now or at the Doha
Ministerial to begin a negotiation on an investment agreement or on
investment rules. It is also not acceptable to begin negotiations on a
plurilateral agreement, nor on an agreement regarding only transparency.
6. GOVERNMENT PROCUREMENT
The Singapore WTO Conference (1996) agreed "to establish a working group to
conduct a study on transparency in government procurement practices, taking
into account national policies, and based on this study, to develop elements
for inclusion in an appropriate agreement." The decision does not specify
that there must result an agreement; it only commits Members to a working
group to study the subject of transparency and based on this study to
develop the elements to include in an appropriate agreement. There is thus
scope to limit the progress towards an agreement, and to put forward the
case for what an appropriate agreement, if any, should be like.
Whilst the study in the working group, and the agreement, is only mandated
to cover transparency (and not the practices themselves), the major
countries pushing this issue had made clear their ultimate goal to fully
integrate the huge worldwide government procurement market into the WTO
rules and system. At present, WTO Members are allowed to exempt government
procurement from WTO market access rules. The exception are those Members
who have joined the WTO's plurilateral agreement on government procurement.
Due to the unpopularity of fully integrating procurement into the WTO with
almost all developing countries, the majors devised a tactic of a two-stage
process: firstly, to draw in all Members into an agreement on transparency;
and secondly, to then extend the scope from transparency to other areas (for
example, due process) and then to the ultimate areas of market access, MFN
and national treatment for foreign firms. This is clear from the various
papers of the majors.
If the integration of procurement into WTO eventually takes place (as is
clearly the aim of the major developed countries), governments in future
will not be allowed to give preference to local companies to supply goods
and services or to obtain concessions for projects. The effects on
developing countries would be severe.
Government procurement has very important economic, social and even
political roles in developing countries:
* The level of expenditure, and the attempt to direct the expenditure to
locally produced materials, is a major macroeconomic instrument, especially
during recessionary periods, to counter economic downturn.
* There can be national policies to give preference to local firms,
suppliers and contractors, in order to boost the domestic economy and
participation of locals in economic development and benefits.
* There can be specification that certain groups or communities, especially
those that are under-represented in economic standing, be given preference
* For procurement or concessions where foreign firms are invited to bid,
there could be a preference to give the award to firms from particular
countries (eg other developing countries, or particular developed countries,
with which there is a special commercial or political relationship).
Should government procurement be opened up through the national treatment
and MFN principles, the scope and space for a government to use procurement
as an instrument for development would be severely curtailed. For example:
* If the foreign share increases, there would be a "leakage" in government
attempts to boost the economy through increased spending, during a downturn.
* The ability to assist local companies, and particular socio-economic
groups or ethnic communities would be seriously curtailed.
* The ability to give preferences to certain foreign countries would
similarly be curtailed.
Proposed Position: In light of the background information above, on the
strategy of the majors, a position should be taken that reflects the overall
strategic situation, rather than a position that is focused more narrowly on
the technicalities or legalities alone.
The discussions on "transparency" and on a "transparency agreement" should
be seen in the light of the strategic objective of the majors to draw in the
developing countries into the real goal of market access and full
integration of procurement practices. Therefore if there is an agreement on
transparency, it would be the start of a slippery slope that would most
likely lead, in years ahead, to a full fledged market-access agreement.
The following position could thus be taken:
(a) We have yet to fully comprehend and appreciate the desirability, degree
of appropriateness and implications of even a transparency agreement in WTO,
especially as to how it would affect social, economic and political
development;
(b) We are extremely concerned that by introducing the subject, even in the
limited transparency aspect, that this would lead step by step to market
access issues, and our concerns for this have to be absolutely allayed first
for there to be a reasonable degree of comfort to discuss transparency;
what are the ways in which these concerns can be allayed to our full
satisfaction?
(c) We are not convinced that an agreement even if confined to transparency
can be properly implemented or that its implementation will be on balance
beneficial to us as a developing country.
(d) Since the issues are so complex, the study process in the working group
has to continue, and in fact it is by no means a foregone conclusion that
there can be an appropriate agreement that every country can agree on or is
satisfied with.
(e) Therefore, it is crucial that the Doha Ministerial text or set of
decisions does not include either a transparency agreement nor a decision to
start a negotiation on a transparency agreement.
In the continuing discussion in the working group, and in the process for
Doha, positions should also be worked out in detail on issues such as:
problems of implementing even a transparency agreement; the scope of
transparency agreement; the definition of "transparency"; the issue, even
if on transparency, should not be linked to the dispute settlement system in
WTO; the agreement, if any, should be in the form of non-binding guidelines
and not a legally binding agreement.
7. COMPETITION
At the Singapore Ministerial (1996), Ministers decided to set up a working
group on the interaction between trade and competition policy. There was a
specific mention that this does not commit Members to negotiate an agreement
in the WTO on competition.
At present, the EU is still pushing for inclusion of negotiations for a
comnpetition agreement in a New Round to be launched at Doha; whilst the US
appears cool. The main aim of the EU (the main proponent) and the US (as
announced by its Trade Representative after the Singapore Ministerial) is to
establish competition laws in developing countries that would enable the
large foreign firms to be able to compete in a "free competition"
environment in developing countries, whereby advantages to local firms (in
terms of government policy or private-sector practices) would be considered
to be unfair competition.
The EU proposal is to have multilateral rules that discipline Members to
establish national competition law and policy. These laws/policies must
incorporate the "core principles of WTO", defined as transparency,
non-discrimination, MFN and national treatment.
Competition law and policy, in appropriate forms, are beneficial to the
country. However each country must have full flexibility to choose a model
which is suitable, and which can also change through time to suit changing
conditions. Having an appropriate model is especially important in the
context of globalisation and liberalisation where local firms are already
facing intense foreign competition
The EU proposal for competition policy to provide "effective opportunity for
competition" in the local market for foreign firms, and thus to apply the
WTO "core principles" to competition law/policy would affect the needed
flexibility for the country to have its own appropriate model or models of
competition law/policy.
Competition law/policy should complement other national objectives, eg
industrial policy, or the need for local sectors to compete in the context
of liberalisation. Therefore the traditional or the UK and US models of
competition may not be appropriate for a developing country. On the other
hand the Japan model of the 1950s-70s may be more appropriate but may not be
allowed under the EU proposed framework of applying WTO principles to
competition policy.
If a multilateral approach is needed, there are other venues that are more
suitable, eg UNCTAD with its Set on RBPs.
Competition can be viewed from many perspectives. From the developing
countries' perspective, it is important to curb the mega-mergers and
acquisitions taking place which threaten the competitive position of local
firms in developing countries. Also, the abuse of anti-dumping actions in
the West is anti-competitive against developing countries' products. The
restrictive business practices of large firms also hinders competition.
However these issues are unlikely to find favour with the major countries,
especially the US, which wants to continue its use of anti-dumping actions
as a protectionist device. If negotiations begin, the EU interpretation of
competition, ie the need for foreign firms to have national treatment and
free competition, could well prevail, especially given the unequal
negotiating strength which works against the developing countries.
The likely result is that developing countries would have to establish
national competition laws and policies that are inappropriate for their
conditions. This would curb the right of governments to provide advantages
to local firms, and local firms themselves may be restricted from practices
which are to their advantage (eg the use of exclusive distribution channels
built up over generations of business and trust).
The complex issues are not adequately explored, especially the development
aspects and the effects of the proposals on development.
Proposed Position to Take: The issue of the interaction between trade and
competition policy is extremely complex, as there are so many aspects and
definitions and interpretations of "competition", as well as of the
principles of trade policy. Moreover, it is far from clear what are the
implications of the proposals of EU and other proponents for the development
prospects of developing countries. Therefore, we cannot agree to any
decision to begin negotiations on establishing a multilateral framework or
agreement on trade and competition policy. At best, the work of the study
group can continue, and it should focus on the implications for developing
countries of previous and future proposals on the subject.
8. CONCLUSIONS
(a) Rethinking the nature and timing of liberalisation
Given the problems and imbalances in world trade, there is the need for a
rethinking of the dominant model of trade policy that has advocated
across-the-board rapid liberalisation for developing countries.
For a successful trade policy, a country has to "calibrate" and aim for
balance between the two major aspects of trade, i.e. imports and exports.
Many developing countries do not possess yet the factors required for
sustained export growth. Yet they have been under pressure to rapidly
liberalise their imports. If import liberalisation proceeds whilst the
conditions for successful export growth are not yet in place, there can be
adverse results, such as increases in the trade deficit and balance of
payments difficulties, which then adds to the level of external debt and
greater debt servicing burden, leading to retardation of economic growth and
increased unemployment.
In the recent experience of many developing countries, trade liberalization
can (and often does) cause imports to surge without a corresponding (or
correspondingly large) increase in exports. UNCTAD's Trade and Development
Report 1999 found that for developing countries (excluding China) the
average trade deficit in the 1990s was higher than in the 1970s by 3
percentage points of GDP while the average growth rate was lower by 2
percentage points. Inappropriate trade liberalisation contributed to this
negative phenomenon. "It (trade liberalization) led to a sharp increase in
their import propensity, but exports failed to keep pace, particularly where
liberalization was a response to the failure to establish competitive
industries behind high barriers."
Trade liberalization should not be pursued automatically or rapidly, as an
end in itself. Rather, what is important is the quality, timing, sequencing
and scope of liberalization (especially import liberalization), and how the
process is accompanied by (or preceded by) other factors. If conditions for
success are not present yet in a country, then to proceed with import
liberalization (or liberalisation of services, including investments) can
lead to negative results or even persistent recession.
Therefore, developing countries need adequate policy space and freedom, to
be able to choose between different options in relation to their trade
policies. Developing countries must have the scope and flexibility to make
strategic choices in trade policies and related policies in the area of
finance, investment and technology, in order to make decisions on the rate
and scope of liberalization.
(b) Reorienting the WTO towards development as the main priority
The preamble to the Marrakesh Agreement recognises the objective of
sustainable development and also the need for positive efforts to ensure the
developing countries secure a share in international trade growth
commensurate with the needs of their economic development. However, in
practice, development is not seen as a primary WTO objective; nor was it a
primary purpose of the Uruguay Round or the Marrakesh Agreement.
The objective of development should become the overriding principle guiding
the work of the WTO, and its rules and operations should be designed to
produce development as the outcome. Since the developing countries form the
majority of the WTO membership, the development of these countries should be
the first and foremost concern of the WTO.
The test of a rule, proposal or policy being considered in the WTO should
not be whether that is "trade distorting" but whether it is "development
distorting." Since development is the ultimate objective, whilst reduction
of trade barriers is only a means, the need to avoid development distortions
should have primacy over the avoidance of trade distortion. So-called "trade
distortions" could in some circumstances constitute a necessary condition
for meeting development objectives. From this perspective, the prevention
of development distorting rules, measures, policies and approaches should be
the overriding concern of the WTO.
The re-orientation of the WTO towards this perspective and approach is
essential if there is to be progress towards a fair and balanced
multilateral trading system with more benefits rather than costs for
developing countries. Such a reorientation would make the rules and
judgment of future proposals more in line with empirical reality and
practical necessities.
Taking this approach, the goal for developing countries would be to attain
"appropriate liberalisation" rather than to come under the pressure of
attaining "maximum liberalisation."
The rules of WTO should be reviewed to screen out those that are
"development distorting", and a decision could be made that, at the least,
developing countries be exempted from being obliged to follow rules or
measures that prevent them from meeting their development objectives. These
exemptions can be on the basis of special and differential treatment.
(c) Rethinking the scope of the WTO's mandate over issues and the role of
other agencies
It is misleading to equate the WTO with the "multilateral trading system",
as is often done in many discussions. In fact the WTO is less than and more
than the global trade system. There are key issues regarding world trade
that the WTO is not seriously concerned with, including the trends and
problems os the terms of trade of its Members, and the problems in primary
commodity markets (including low commodity prices). On the other hand, the
WTO has become deeply involved in domestic policy issues such as
intellectual property laws, domestic investment and subsidy policies. There
are also proposals to bring in other non-trade issues including labour and
environment standards.
The WTO and its predecessor the GATT have evolved trade principles (such as
non-discrimination, MFN and national treatment) that were derived in the
context of trade in goods. It is by no means assured or agreed that the
application of the same principles to areas outside of trade would lead to
positive outcomes. Indeed, the incorporation of non-trade issues into the
WTO system could distort the work of the WTO itself and the multilateral
trading system.
Therefore, a fundamental rethinking of the mandate and scope of the WTO is
required. Firstly, issues that are not trade issues should not be
introduced in the WTO as subjects for rules. This rule should apply at
least until the question of the appropriateness and criteria of proposed
issues is dealt with satisfactorily in a systemic manner.
Secondly, a review should be made of the issues that are currently in the
WTO to determine whether the WTO is the appropriate venue for them.
Prominent trade economsist such as Jagdish Bhagwati and Sreenivasen have
concluded that it was a mistake to have incorporated intellectual property
as an issue in the Uruguay Round and in the WTO. There should be a serious
consideration, starting with the mandated review process, of transferring
the TRIPS Agreement from the WTO to a more suitable forum.
Within its traditional ambit of trade in goods, the WTO should reorientate
its primary operational objectives and principles towards development, as
elaborated in the sections above. The imbalances in the agreements relating
to goods should be ironed out, with the "re-balancing" designed to meet the
development needs of developing countries and to be more in line with the
realities of the liberalisation and development processes.
With these changes, the WTO could better play its role in the designing and
maintainence of fair rules for trade, and thus contribute towards a
balanced, predictable international trading system which is designed to
produce and promote development.
The WTO, reformed along the lines above, should then be seen as a key
component of the international trading system, co-existing, complementing
and cooperating with other organisations, and together the WTO and these
other organisations would operate within the framework of the trading
system.
Other critical trade issues should be dealt with by other organisations,
which should be given the mandate, support and resources to carry out their
tasks effectively. These other issues should include: (i) assisting
developing countries to build their capacity for production, marketing,
distribution and trade; (ii) the need for monitoring and stabilising
commodity markets, with a view to ensuring reasonable prices and earnings
for commodity-producing developing countries; (iii) addressing the
restrictive business and trade practices of transnational corporations that
reduce the conditions for smaller firms to engage in production and trade;
(iv) addressing the problems of low commodity prices and developing
countries' terms of trade. These issues can be dealt with by various UN
bodies, especially a revitalised UNCTAD.
----- End forwarded message -----
--
______ _________________________________________________
/ | jonivar skullerud jonivar@bigfoot.com |
| jon | http://www.bigfoot.com/~jonivar/ |
\______ | |
\ | None are more hopelessly enslaved than those |
ivar | | who falsely believe they are free. -Goethe |
_______/ |_________________________________________________|
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