Fw: Winding down to Seattle

[Ulhas Joglekar]

> Volume 16 - Issue 24, Nov. 13 - 26, 1999
> India's National Magazine on indiaserver.com
> from the publishers of THE HINDU
>
>
> Winding down to Seattle
>
> Although no agreement on an agenda incorporating a new round of
negotiations
> could be arrived at in Lausanne, the idea of such an agenda is winning
> support even among some developing countries. Will the transition from
> opposition to acquiescence which led up to the inequities in the Uruguay
> Round be repeated in Seattle?
> C.P. CHANDRASEKHAR
>
> AS the debate on the agenda of the Ministerial Conference of the World
Trade
> Organisation (WTO) in Seattle nears resolution, the discussions appear to
be
> following a course similar to the negotiations which led up to the Uruguay
> Round agreement. The debate began with most developing countries opposed
to
> an agenda proposing a new round of multilateral trade negotiations. But it
> is likely to end with a consensus which incorporates such a proposal.
> The grounds for developing country opposition to a new round were clear.
> Agreeing to such a round amounts to transforming the mandated review and
> renegotiation of the agreements in the contentious areas of agriculture
and
> services into a set of wholly new negotiations, with a wholly new agenda.
> The developing countries did want the review to be expanded to include an
> appraisal of the impact of the Uruguay Round on their trade performance
and
> prospects, in order to assess whether the benefits promised from
agreements
> in that round were being realised.
>
> But going beyond this proposal for an extended review to a full-fledged
new
> round does have important implications. To start with, it implies that the
> fundamental thrust of the next set of negotiations should be further
> liberalisation in chosen areas, with no review and roll-back of past
> agreements. Secondly, it signals to the world that what is at stake are
not
> marginal adjustments around Uruguay Round benchmarks, but significant
> advances in the direction of further liberalisation. Third, it opens the
> door to the introduction of new areas of negotiation involving linkages
> between trade and environment issues, trade and labour questions and
finally
> a multilateral agreement on investment.
> For the developed countries as a group this offers substantial gains.
> Principally, it would shift the focus away from the need to redress the
> obvious imbalances in the Uruguay Round agreement with regard to market
> access. The evidence is clear (see charts) that the concessions received
by
> developing countries in terms of the share of imports over which tariff
> concessions apply and the depth of the tariff cut they benefited from was
> lower than that which applied to the developed countries. That is,
starting
> from a position of subordination, developing countries appeared to have
> offered more in the nature of concessions with regard to market access
than
> the developed countries did.
>
> But even this picture is partial, inasmuch as it does not capture the
actual
> extent of trade liberalisation and the commodity composition of the areas
in
> which the concessions were offered by the two sides. In fact, as a result
of
> the enforced or voluntary pursuit of liberalisation strategies, developing
> countries have proceeded much further in doing away with non-tariff
barriers
> and reducing tariffs than warranted by the commitments in the Uruguay
Round.
> In the event, the evidence is now overwhelming that both across and within
> product groups, the developing countries began to give virtually
immediately
> after the Uruguay round negotiations were complete, but they are yet to
> begin to receive much by way of benefits in areas that matter to them from
> an export point of view.
> Nothing epitomises this more than the agreement relating to textiles. From
> the point of view of the developing countries, the most visible and
> "multilaterally" accepted non-tariff barrier regime prior to the Uruguay
> Round was the Multi-Fibre Arrangement (MFA). That arrangement was the
> end-result of a series of negotiated agreements starting in the 1960s, all
> of which sought to provide the developed countries with the time needed to
> restructure their industries so that competitive textile exports from
> lower-cost developing countries do not "disrupt" their markets. Despite
> three decades of agreement on that principle and periodic revisions of the
> deadline to end import restrictions, textiles still were by the late-1980s
> not permitted free entry into developed-country markets. The case for an
> immediate end to such restrictions, under a new multilateral trade regime,
> was therefore strong. However, though the Uruguay Round agreement on
> textiles and clothing provided for the phasing out of restraints stemming
> from the MFA, it once again diluted and delayed the process of
> liberalisation. To start with, the agreement was made applicable to all
> textile imports into developed countries rather than those on which quotas
> applied at that time. Further, the process which was designed to occur in
> four stages over a ten-year period was heavily "back-loaded", in the sense
> that most of the liberalisation was to occur during the final stages.
Thus,
> more than five years after the agreement has been in place, only 33 per
cent
> of imports of four categories of textiles and clothing in 1990 (tops and
> yarns, fabrics, made-up textile products and clothing) have been rendered
> quota-free. Quotas on another 18 per cent are to be removed after another
> two years and on the remaining 49 per cent in 2004.
> This prolonged and back-loaded agreement in a labour-intensive area in
which
> the developed countries had agreed to open up markets more than three
> decades back, points both to the relative positions of power of developed
> and developing countries in the Uruguay Round negotiations as well as to
the
> extent of commitment of the latter to offer greater market access as a
quid
> pro quo for the rapid liberalisation of trade and investment rules in the
> developing countries.
> What is more revealing is the evidence on the progress on this front. With
> two stages of the phase-out process being complete out of the quotas under
> MFA that had been notified by the United States, the European Union (E.U.)
> and Canada, only 1, 7 and 14 per cent respectively have been withdrawn.
Much
> of the phase-out thus far has covered commodities which were not even in
> consideration. Further, most of these are textile products which do not
> dominate the developing countries' export basket. Above all, the extent of
> tariff concessions, both in terms of tariff reduction and the share of the
> relevant imports subject to cuts, provided by the developing countries
have
> been higher than that provided by the developed countries in industrial
> products in general and in the textile area in particular. That is, five
> years after the completion of the Round and at a time when talk is already
> on with regard to initiating a new round, developing-country,
market-access
> "gains" in an area most crucial to them have been minimal.
> THE implication of this is obvious enough. Even in an area as basic as
> market access, what is called for now is a review of the Uruguay Round
aimed
> at redressing the inequalities it carried through in its fine print,
rather
> than an extension of the Round either in the form of more intensive
> liberalisation or in the form of extending the multilateral framework into
> new areas. This view would be strengthened if an appraisal is made of the
> differential impact of agreements on trade-related investment measures and
> trade-related aspects of intellectual property rights. Evidence of this
kind
> has been marshalled by the developing countries in their submissions to
the
> WTO. By demanding that the next phase of multilateral engagement should
not
> be restricted to a review but extended into a wholly new round, the
> developed countries are seeking to shift the focus away from these glaring
> inequalities that have surfaced since the Marrakesh agreement of 1994, and
> wrest new concessions in wholly new areas.
> But that is not all. If the next stage of multilateral engagement is
> restricted to a review, the focus would be on agriculture, wherein the
U.S.
> and the E.U., particularly the latter, have in practice made minor
> concessions in the Uruguay Round. By providing their farmers concessions
> through alternative routes, they have been able to keep the actual average
> measure of support (AMS) to agriculture above what would be normally
> permissible under the Uruguay Round. This is the reason why unlike many of
> the agricultural exporters who are members of the Cairns group, who want
> more far-reaching liberalisation in agricultural trade, the U.S. and E.U.
> want non-agricultural commodities brought into the discussion in order to
> make it more diffused.
>
> What is more, by bringing in environmental issues, labour standards and
> social clauses into the negotiations on trade, these developed countries
are
> seeking to win for themselves new protectionist devices which, like the
> anti-dumping clause under the Uruguay Round, can be used as protectionist
> devices when and wherever required. Since the standards, if any, set under
> these heads can never improve upon the current standards in the developed
> industrial countries, the possibility that such agreements could be used
by
> the developing countries as well does not arise.
> Thus, for the developing countries, giving up on the slogan of
"standstill,
> review and, if necessary, roll-back" would be extremely damaging. What is
> surprising, therefore, is the fact that, though no agreement on an agenda
> incorporating a new round could be arrived at the pre-Seattle, Lausanne
> meet, the idea of such an agenda is winning support even among some vocal
> developing countries. India, for example, has not merely toned down its
> language and spoken of the need to discuss "implementation issues", but
has
> reportedly turned around to the view that it should not resort to
> "opposition for opposition's sake". If things take such a turn, the
> transition from opposition to acquiescence which led up to the inequities
in
> the Uruguay Round would be repeated this time around as well.
> On the surface there appears to be no need for the developing countries to
> succumb to developed country pressures since constitutionally the WTO is
an
> organisation where each member has a vote. The power that the threat of
> exercising that vote carries was seen in the recent split between the
> developed and the developing countries over the Director-Generalship of
the
> organisation. The final compromise involves a term of three years each for
> the two candidates backed by the developed and the developing countries.
> Despite this power, the developing countries have gone along with the
> principle that the contracting parties should adopt a consensus procedure.
>
> This is partly because decisions arrived at any other way could encourage
> individual developed nations to opt out of the GATT or WTO, and such a
> development result in a virtual dismemberment of that body. Given the
> dominance of the developed countries over the world trading system and the
> dependence of the developing countries on the markets of the developed,
> having the developed countries in was, and remains, crucial for the
> developing countries. This in itself puts pressure on the developing
nations
> to accept much of what the developed countries propose, in return for
small
> concessions in other areas.
> But what matters more is the fact that in the wake of liberalisation in
the
> developing world, most developing countries are keen to attract larger
> capital flows from the developed countries in the form of aid, debt and
> foreign investment. This has substantially increased the implicit and
> explicit cross-conditionality enforced by the developed countries.
> Cooperation and support with regard to capital flows requires acceptance
of
> a specific form of trading arrangement. Such cross-conditionality has
helped
> ensure that the developed countries would have their way that much more
> often. Even when disputes arise, inequality implies that settlement would
> follow what has been identified as a "power-oriented approach," in which
the
> relative strengths of the parties rather than a set of predefined rules
> determine the nature of the settlement.
> This has one important implication. If developing countries are to prevent
> the almost continuous erosion of their economic space through formal
> institutional arrangements at the global level, without receiving much in
> return by way of trade concessions, they need to rethink their development
> strategies as well. Only then would they have the manoeuvrability to
> exercise a right that the voting principle enshrined in the WTO's
> constitution guarantees. Unfortunately, a change in the trajectory of
> development is not a possibility by the time of the Seattle Summit. This
> could influence the outcome of that summit. But a change in strategy is
> definitely a prospect that could be explored soon during the prolonged
> negotiations that the Millennium Round would entail, if it is initiated. A
> change that is significant enough to ensure an outcome from that round
which
> is better than the failed promises of the agreement signed in Marrakesh.
>
>
>
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