WTO: IMPLEMENTATION PACKAGE IS A "GLASS WITHOUT WATER"

By Chakravarthi Raghavan in Geneva

South North Development Monitor

Numbers 4805, 4806 (15, 18 Dec 2000)

The General Council of the World Trade Organization adopted

on Friday 15 Dec a decision on implementation issues that the Chair

itself said was 'modest', but which many developing nations described

variously as "extremely disappointing", a 'glass without water', and an

outcome with 'non-existent results'.

The very skimpy results in the draft decision that had been

subject of informal General Council consideration in three

meetings on 14-15 December became skimpier in the final version

adopted, with the elimination of any reference to the General

Agreement on Trade in Services and Mode 4 for supply of

services.

The decision of the General Council, covering only a few of

the implementation issues raised by developing countries, is

as sparse in operative decisions as atoms in outer space.

There were in fact only two operational decisions: one

relating to Honduras, which was a six-year belated attempt to

rectify an error of the secretariat in preparing the Marrakesh

documents in having left out mention of Honduras in the list

of Annex VII(b) countries, and the other on further work on

implementation issues.

In the Honduras case, that country had negotiated its

accession to GATT during the Uruguay Round and joined end 1993

or early 1994, and went to Marrakesh where it signed the

agreement. The fact of the omission of Honduras name from the

list of countries with a per capita below $1000, entitling it

to be included in the list of Annex VII(b) was discovered by

that country when the WTO came into being, but its efforts to

get it rectified all this time proved unavailing.

The Further Work on implementation, in para 7 of the decision

said:

"The General Council decision of 3 May on

Implementation-Related Issues is reaffirmed. The General

Council shall address outstanding implementation-related

issues and concerns, including those set out in paragraphs 21

and 22 of the revised Draft Ministerial Text dated 19 October

1999 (Job899)/5868/Rev.1) as well as any other

implementation-related issues raised by Members, as envisaged

in the Decision of 3 May and the work programme agreed on 22

June 2000, with a view to completing the process no later than

the Fourth Session of the Ministerial Conference."

Though the General Council decision uses in several places the

mandatory 'shall', in substance it is no more than a 'best

endeavour' package -- with the mandatory language 'shall'

rendered meaningless by using it only for examination or

consideration or take into account etc -- by the countries or

the WTO bodies.

Perhaps the only real 'mandatory' language is to reinforce the

notification requirements in some areas where even other

industrial countries have an interest - such as one on

transparent and non-discriminatory administration of tariff

rate quota regime in agriculture.

The eliminated para about supply of services in Mode 4 had

also contained some mandatory language requiring steps to be

taken to ensure that administrative practices do not impede

full and effective implementation of commitments on supply of

services through movement of natural persons (Mode 4) - which

incidentally also sometimes involves movement of managerial

and highly technical personnel for supply of services through

commercial presence etc.

"It is a nicely wrapped, Xmas package, without any content,

and its only merit is that the implementation issues have not

disappeared and cannot be brushed under the carpet in the

preparations for a new Ministerial meeting in 2001," a trade

diplomat observed.

The WTO and its agreements are full of such 'best endeavour'

language on questions that involve some benefits to developing

countries, and after six years of the WTO, developing

countries have gained nothing. And while developing country

trade ministries and establishments are trying to fend off

internal opposition from legislatures, domestic enterprises

and civil society, about the benefits of a rules-based system,

these are increasingly wearing thin, the diplomat noted. And a

year spent on 'confidence building' measures have merely

eroded confidence further in the system.

Developing country diplomats talking outside said that save

for the long-overdue rectification of an error relating to

Honduras, this last para of the decision, ensuring the

continuance of the implementation issues on the WTO agenda,

was the only outcome for them. But even this would move

forward only when the developing countries continue the

process and keep up the pressures in the New Year, and not

allow themselves to be fooled that a new round would solve

these issues.

Some industrialized countries, who had unsuccessfully

attempted through the Chairman's statement to link the future

work on implementation to a "wider work programme ... with a

broad and balanced agenda overall" but had to agree to this

being dropped, came back to the issue Friday.

The United States said that the process of dealing with the

implementation issues next year should not be a burden on the

principal work of the General Council next year, namely

preparing for the 4th Ministerial and that many of the new

would need new negotiations. Poland (speaking for the central,

east European and some Balkans, all seeking accession to the

EU, and thus following EU-acquis) said the launching a new

round should not be made hostage to implementation.

Pakistan from the opposite side of the debate said it was very

important not to link implementation issues to wider

negotiations since this could have "negative synergies" that

have a "chilling effect on the rest of the organization."

And India, which with Pakistan and other members of the

Like-Minded Group has been a major force in bringing the

implementation issue to the top of the WTO agenda, said the

results were at best "a minimal first step", and in countries

like India the implementation issue and how it was resolved

would alone build confidence in the WTO and enhance its image.

The Chairman of the General Council, Amb. Kare Bryn of Norway,

in another context at the GC Friday, had said he estimated he

had spent some 800 hours this year on the various formal and

informal consultations on this issue.

Many developing country delegates thanked him and said outside

the meeting that Bryn had made sincere attempts, but

nevertheless the outcome has to be judged in terms of its

operational benefits for developing countries and whether the

inequities and asymmetries of the past would be redressed even

partially.

A frank assessment must lead to 'an emphatic NO' as the

answer.

Far from building confidence in the system, developing

countries are ending the year of confidence-building exercise,

with even less to show than when they began the year - with

the General Council decision to start a confidence-building

measures.

Even the only operational feature of the decision Friday,

namely, for continuing the work on the implementation issues

and completing the process before the next Ministerial

Conference (in 2001) may well get submerged in the

preparations for the 4th Ministerial Conference, or tying

solutions to the new Round, unless the developing countries

who have forced the majors to deal with the issue, persist in

the New Year and not allow the WTO leadership and the major

trading nations and their 'allies' in the South to sweep these

issues off the table.

And judged by past experience, the latter is a distinct

possibility: developing countries have no institutional

memory, and their many intergovernmental bodies and

think-tanks, depending on the North for finance, have not been

very successful either. And with a new crop of trade diplomats

who would replace the current ones, the issues may well be

relegated to the background as in the past.

Only domestic businesses and industry in major developing

countries, as well as their civil society groups, have become

aware of the WTO and its implicatiions, and the history of the

Uruguay Round and Marrakesh accord cannot be replicated.

In introducing his draft decision for adoption, Bryn outlined

the various stages of the consultation processes, including

the referring some of the issues to the relevant WTO bodies.

>From the reports of these bodies, he said, work on the issues

referred to them would continue, but the GC retained the

overall responsibility: the results of the work referred to

subsidiary bodies must come back to the GC.

The draft decision, he stressed, was the outcome of

consultations conducted by the DG and himself, and the

informal discussions at the GC. The result of the work

"although modest" is important in that "it is a clear

indication of the collective will to take decisions on

implementation-related issues and concerns, and also to

continue to find solutions in this area."

Earlier, the Uruguayan diplomat, Mr. William Ehlers, speaking

on behalf of the Uruguayan ambassador, Perez del Castillo

(chairman of the Council on Trade in Goods) dealing with the

transition period extension issues of TRIMs noted that he had

already presented to the GC "elements of an approach" to take

account of various positions on the issue. And while it had

attracted considerable support, the question remained whether

it would be possible to reach agreement based on the elements

in all nine cases where extension of time had been requested.

[In at least one case, that of the Philippines, the US has

chosen to invoke the dispute settlement process.]

Several countries took the floor to make comments after the

decision was adopted.

Colombia, speaking on behalf of the countries who have sought

extension of the transition period for the TRIMS (made on

behalf of the countries that have sought an extension)

stressed the importance they attached to progress on the issue

in the CTG and hoped one would be reached early in the new

Year. Brazil's Celso Amorim said he did not want to place a

value on the document, after the Chair had done so viewing it

as "modest". Even if the GC had not decided anything, it had

treated the issue seriously. From Brazil's point of view, the

results were "almost non-existent."

In a reference to the preambular paragraph about development

of internationally agreed disciplines (in the area of

Agriculture) on export credits, credit guarantees or insurance

programmes (as provided in Article 10.2 of the Agriculture

Agreement), Amorim also objected to the idea that rules on

these and other issues could be created in international

organizations outside the WTO and imposed on WTO members.

Art. 10.2 envisages the WTO members undertaking this work, but

this has been stalled by the US and others, pending the

outcome of their own negotiations on the same issue at the

OECD.

As a result, the issue has not been resolved in terms of the

'implementation issues'.

The United States said that the continuance of the process on

implementation (at the General Council) next year should not

become a burden on the Council in its main work of preparing

for the 4th Ministerial. Some of the 'implementation' issues

would require new negotiations. The US did not believe

continuing the present process would be to any advantage and

advised other members to take a "realistic approach".

Poland speaking on behalf of a number of east and central

European countries suggested that many of the issues under

implementation could be resolved only in the context of

broader negotiations (a view that the EC has been pushing).

Implementation should not overwhelm the work programme, and a

future round should not be held hostage to implementation.

Egypt's Amb. Fayza Aboulnaga said the outcome was "extremely

disappointing". It did not help convey a sense of confidence.

She referred to the failure to address the issue of the

negative effects of the Agriculture Reform on the Least

Developed and Net Food-importing countries (as decided at

Marrakesh). Even the very small reference to the Mode 4

(movement of natural persons) for supply of services had been

deleted from the text. The decisions taken was at best "an

interim decision."

[In the 13 December draft, now eliminated by US opposition,

said: "Members shall take steps so that administrative

practices do not impede the full and effective implementation

of their commitments under the General Agreement on Trade in

Services (GATS), particularly as regards the supply of

services under Mode 4 as provided in Article 1.2 (d) of the

GATS.]

Uganda's Amb. Nathan Irumba said the text was "extremely

modest", and things of importance to Uganda such as the

Technical Barriers to Trade and the Sanitary and Phytosanitary

Agreements had not been touched. Nor was there any mention of

the steps under Art. 66.2 of the TRIPs agreement providing for

measures to be taken by industrial countries for transfer of

technology by their corporations. Uganda also complained about

the deletion of the references to GATS and Mode 4.

Pakistan's Amb. Munir Akram underlined that of all the

trade-related issues for developing countries,

'Implementation' was the most important issue on the agenda of

the General council. Progress on the issue was supposed to

build confidence after seattle. While he appreciated the

patience and efforts of Chairman Bryn, it was clear that most

of the concerns of the developing countries had not been

addressed and the results were modest indeed. After all the

hours spent only nine of the 55 indents in para 21 of the

Mchumo text had been dealt with. In responding to the usual

comments about half-empty or half-full glass, Akram said the

'glass had no water'. There was nothing on textiles and mode

IV under GATS. But the para 7 on future work was important. In

Pakistan's view it was important not to link implementation to

wider negotiations. To do so would create negative synergies

and this would have a chilling effect on the rest of the

organization, he warned.

India's Amb. S.Narayanan expressed his appreciation of the

Chair's efforts, but expressed his country's "profound

disappointment".

The major delegations themselves had characterised them as

"modest and meagre". For India, he said, it was "less than

modest or meagre; it is below our lowest expectations."

In the Chair's draft of 29 November (for consultations), he

had incorporated possible decisions on 28 tirets (indents) of

the 54 in para 21. The draft of 13 December had contained

possible decisions on nine. And while the draft of 14 Dec

contained possible decisions on nine, there was a quantitative

rather than qualitative equality. The indent on Services in

the 13 Dec draft had been eliminated, and made good

(quantitatively) by including another one in subsidies, in the

nature of a referral to the Subsidies Committee.

Of the 54 items in para 21, the decision covered nine, and of

these five merely were referrals to subsidiary bodies and two

'appeals' to other international organizations. There were

only two meaningful decisions - one of rectification of an

error in Honduras case, and another on the tariff quota regime

in Agriculture.

Qualitatively, the fact there had been no decisions in

Textiles, Anti-Dumping and Subsidies "spoke eloquently" for

the real impact of these decisions in terms of trade or

economics for developing countries.

It was also regrettable that the Services, that had figured in

the 13 December draft, was not included. During the informal

consultations (a reference to closed green-room type

consultations that Bryn had held) everyone had agreed to a

simple decision on Mode 4, movement of natural persons, and

India went along with the draft suggested by Bryn and had even

agreed to a further dilution. This now did not even find a

place and this was extremely disappointing.

The results achieved, Narayanan added, was at best "the first

minimal step".

India had always maintained that the issues raised under

'Implementation' required a certain amount of 'political

sensitivity' and could not be dealt with in a 'narrow and

legal straitjacket'. This was why India had been reluctant to

refer these issues to subordinate bodies, but in a spirit of

compromise and in deference to Bryn's wishes, India had agreed

to refer some issues to subsidiary bodies. Since then, said

Narayanan, he had read the reports of the subsidiary bodies.

Having gone through those on TRIPs and Customs Valuation, for

example, India was disappointed at the lack of substantive

results on progress,

In the TRIPS Council for example, it had not even been

possible to grant observership to the secretariat of the

Convention on BioDiversity (the US has been opposed), much

less conduct a serious examination of the relationship between

TRIPS and the CBD on the basis of a Chairman's check list on a

factual note of the secretariat. And for the Customs

Committee, India had sent an expert all the way from Delhi to

participate in the meeting. But despite clarifications

provided, India had not been able to persuade that Committee

to accept "even a simple proposal on exchange of information

on export values in doubtful cases, with a view to reducing

the scope for fraud."

Narayanan added: "... our earlier scepticism about referring

matters to subsidiary bodies has been vindicated. We note

again, in accordance with the 3 May decision, we should refer

matters, only where absolutely necessary, to the subsidiary

bodies with a clear mandate and within a specific timeframe."

Referring to what he called a 'minor issue', Narayanan said

that even in matters as a 'best endeavour clause' or a

desirable course of action, already in various agreements,

"any move to making it meaningful was being resisted by some

delegations on the ground it would require changes in domestic

laws."

"It is a matter of serious concern," he added, "that the best

endeavour clauses in existing agreements do not figure in the

domestic legislation of some of our major trading partners.

Even if it is a best endeavour clause, we think it is

important that this be clearly provided for in legislation, if

not already provided for. This would be in line with the

letter and spirit of the WTO agreements..."

The exercise on Implementation-related issues and concerns

was, and should continue to be about confidence-building. This

could be achieved only through a combination of political will

and good faith.

The results achieved demonstrated that these factors were not

available to the extent needed. Some delegations had said the

fault lay in the process. "We could not disagree more

strongly," the Indian envoy said.

The General council had decided on 22 June that this meeting

(on 15 Dec) would decide on the organization of future work in

this in 2001. It was a matter of regret that this Special

session had not been able to devote attention to this and

decide about the organization of work on the

implementation-related issues and concerns to be carried out

next year. India hoped that the chair through informal

consultations could decide on this well in advance of the next

General Council meeting set for 8 February 2001.

India hoped that in the new Year, delegations would find the

necessary political will, god faith and courage to address the

remaining Implementation issues and find meaningful solutions

well before the deadline for the 4th Ministerial Conference.

"This alone will build confidence in the WTO and enhance the

image of the WTO in countries such as mine. On our part, we

shall continue to persevere in our efforts to persuade major

trading partners to be more forthcoming and demonstrate

greater political will to find meaningful solutions to the

outstanding implementation-related issues and concerns."This

will be the most important common endeavour for all the

delegations in the year ahead," Narayanan said. .

(SUNS 4805 and 4806)