October 22nd 2001
GENEVA– The US and EU, as well as the WTO Secretariat, are showing desperation in their attempts to ram through a new round of trade negotiations with a host of new issues by the WTO Ministerial on 9 November even though more than half of the members remain totally opposed to new issues being brought in.
In Geneva as well as in capitals, we are seeing the majors resorting to a variety of underhand tactics – from Super Green Room meetings (such as the mini-Ministerial held in Singapore) to spreading false rumours that key developing countries have changed their positions and manipulating the media to project a different reality from what is actually happening in the WTO.
WHAT’S GOING ON?
The first draft of the Ministerial Declaration was circulated to members on 26 September. In the run-up to, and since its release, intense closed-door, small-group consultations of 20-25 members have been taking place on various issues of contention. While it is true that more informal General Council meetings have been held to then brief the majority of the outcome of these consultations, the fact remains that the language for the Ministerial draft has emerged as a result of the views of those present in the Green Rooms and does not reflect the views of the majority, including the LDCs and the African Group.
Two mini-Ministerial meetings have already been held. One at the end of August in Mexico and another in October 13-14 in Singapore. Both meetings had about 20-21 Member countries as participants. In both cases, some countries who had not been invited tried to obtain an invitation, but were unsuccessful. According to a delegate from an African country who tried to go to Singapore, the reply when he contacted the WTO Secretariat was that they were not hosting the meeting and therefore were not able to send him an invitation. When he tried the Singapore mission, they told him that they were only co- ordinating the meeting, and were not in a position to send out invitations.
The Chair of the General Council, Stuart Harbinson of Hong Kong, had initially thought of releasing a second draft after the Singapore meeting. Probably in order not to anger those who were not invited to the Singapore meeting this decision has since been changed. The game plan now is that a second text of the declaration will be released at the end of next week (about 26 October).
The strategy seems to be that the US and EC are trying their utmost to get a consensus with the group of 20-25 countries in the Green Room-type consultations on the text, and then presenting it to the others on a take-it or leave-it basis, with the use of threats on various levels to isolate and pressure countries into acquiesce.
To date, the positions are still far apart. The majority of developing countries who are excluded from most of the small group consultations – the LDCs, African countries and others, have made their positions known at the General Council meetings.
However, the media has been used effectively (especially during the Singapore meeting) to portray the impression that sticking points have been resolved. One developing country delegate lamented "All this is part of preparing the psychosis for a new round."
There is also a lot of confusion on the exact status of negotiations. At a briefing early this week for all members on what happened in Singapore, some delegates commented that the version they were hearing was entirely different from their impressions from press reports.
DEAF TO DEVELOPING COUNTRIES’ CONCERNS
While developing countries’ mantra have been ‘implementation!’ and ‘no new issues’ for the past three to four years, the state of negotiations reflect nothing of this. Furthermore, the work on TRIPS and health at the WTO this year, including the proposal by about 50 developing countries that nothing in the TRIPS agreement should prevent members from taking action to protect public health, is currently being stonewalled.
CARROTS AND STICKS
While more than half of the WTO members are saying an absolute "no" to introducing rules on investment, the Green Room negotiations have continued discussions and drafting of language on what types of investment agreements should be brought in. There seems to have emerged two options: one, an opt in-opt out approach, whereby all members negotiate an agreement and then decide towards the end if they want to join in, and two, a two-step approach, whereby discussions continue, but with a clear mandate that negotiations commence at the 5th Ministerial.
According to one delegate who attended the investment informal General Council meeting after the release of the draft declaration, Malaysia’s representative had said that for his country, even the second option was problematic. To the speaker’s annoyance, his comment was met with laughter by those at the meeting, to which he
retorted, "Let’s see who’s going to get the last laugh." Referring to the laughter, the delegate I spoke to said, "With this kind of atmosphere, you can imagine the kind of brow-beating that is taking place now."
At present, the developing country Cairns Group members – mainly Latin American countries, and Thailand and Philippines are not actively refusing investment rules. The speculation in Geneva is that they have accepted investment since agriculture is their main interest. They seem to be taking the view that a new round would at least
guarantee them an end to the agriculture negotiations, and possibly with better results. Without the round, the mandated negotiations in agriculture are unlikely to go very far, and may not even have an end date in sight. Others though feel that even when the Cairns Group agrees to new issues, they will not get the agriculture markets they
want. "The EU will only reduce subsidies when they are ready to, not when they get a new round," remarked an agriculture negotiator.
During the Uruguay Round, services was included in the final package through the same opt-in, opt-out strategy. Members in Punta del Este agreed to a single undertaking – meaning that all agreements would be negotiated and concluded at the same time. However, the option was left open for developing countries to decide if they want to sign on to services at the end. Half-way through the Uruguay Round, however, the meaning of ‘single undertaking’ was manipulated and changed by
the US and EU. According to them, all members would have to accept all, or nothing, of the outcome of the entire package of negotiations. This could well happen if this approach is adopted with investment and competition.
‘FRIENDS OF THE DEVELOPMENT BOX’
There is speculation in Geneva that the agriculture text was largely drafted by the US – not a hard guess since they also expressed the most satisfaction with it.
In their draft, the US seems to have brokered the two polarised groups in the agriculture negotiations – the EU on the one hand, wanting agriculture to be treated differently from industrial goods, and Cairns Group on the other, aiming at complete liberalisation of the sector.
Agriculture is usually the sticking point in WTO negotiations, but there seems to be some satisfaction with the agriculture text presently available. One Southern delegate said, "It’s a balanced text. Don’t get me wrong, this is not what I want. But there is some satisfaction and some dissatisfaction for all sides."
However, in contrast, other developing countries remain unhappy with particularly a group which had, in June 2000, submitted a paper on ‘The Development Box’ (G/AG/NG/W/13) and had subsequently followed this up by various informal proposals this year. Calling themselves ‘Friends of the development box’ they are currently lobbying to include specific reference to a development box in the text
on agriculture in the declaration. Countries in this grouping include Cuba, Dominican Republic, El Salvador, Honduras, Kenya, Nicaragua, Pakistan, Senegal, Sri Lanka, Uganda and Zimbabwe. Their vision is to create a ‘third force’ in the agriculture negotiations. They want their proposals taken on board in negotiations. They also want to ensure that agriculture negotiations are no longer dominated by the EU, Cairns Group and US.
The provisions in this box aim to provide developing countries with flexibilities in border measures and domestic support measures to protect the rural livelihoods of their small farmers, as well as protection of staple crops from dumping.
Specific reference to the development box in the declaration is important for them since, despite their active participation in current WTO negotiations on agriculture, their requests for a development box have been politely received and subsequently ignored by the powerful countries. Should there not be a clear mandate for this box
in the declaration, their recommendations in the past two years may well drop off the table. The secretariat has also actively discouraged proposals along this line. They tried to dissuade one developing country who wanted to add their name to the paper some months after it was first presented last year. They also told another signatory of the paper that they were "asking for the moon."
US / SWITZERLAND REFUSE TO GIVE ON HEALTH
TRIPS and public health has been an issue which has united a good majority of the developing countries. They have pushed hard for a separate declaration to be endorsed at the coming Ministerial. Hours upon hours of consultations on this issue have taken place in the recent weeks, but with no positive results. The ones holding up the
process are the US, Switzerland, and lately Canada. The situation has been characterised as being in logjam. Even the title of the declaration has not been agreed to, much less the content. Developing countries want a declaration on TRIPS and Public Health while the US wants to narrow it down to TRIPS and HIV.
One African delegate, feeling worn down by the process commented last week: "We are meeting everyday from 3-6pm. It’s like torture. We are not in a position to defeat them. For every argument which we put forward, they have a counter argument, and it is not so the other way round. They have lawyers that have worked on IPR issues for 30 years, and they try to defeat us on language. Something that looks OK to us, ends up to be more restrictive (than the existing agreement)."
Another delegate, also from an African country said that the group of developing countries working on this issue is very disappointed. "The other side wants to impose more conditions. What we agreed on was to clarify flexibilities existing in the TRIPS agreement. We didn’t ask for it to be amended, only clarification, so we have a common understanding. We haven’t made any progress in the discussion so far. We are still where we were in June, restating the same thing."
"I blame the Secretariat," he said. "We had already given our proposal about the way the declaration should look like. The other side also gave their own version. What the secretariat should have done was to put the two texts together. Instead, we are starting from zero. When we talk about parallel imports, they bring in article 28 on patent rights. They are also trying to diminish article 6 on flexibility and subordinate it to article 28, when it should be the other way round’.
ENVIRONMENT – THE DEAL BREAKER?
The EU has unexpectedly pushed hard for new rules on environment, in areas on WTO rules and the relationship with multilateral environmental agreements, the precautionary principle and labelling. They are attempting to appease developing countries’ opposition by offering a two-stage approach, an initial work programme to clarify rules in the Committee on Trade and Environment, eventually leading to negotiations at the 5th Ministerial.
Opposition however continues to be quite high. EU in a Green Room meeting before the Singapore ‘mini-Ministerial’ had appealed to Members to understand that this was political problem with their domestic constituency. In reply, one of the Southeast Asian countries retorted that the EU should then find a political solution, rather than an operational one which that country cannot live with.
Informal reports on the outcome of the Singapore ‘mini-Ministerial’ are that the Cairns group, which initially had opposed environmental rules for fear of protectionism in agricultural products, seemed to show signs of buckling down. The majority of developing countries however, are still holding out their opposition. Given how the WTO essentially works for the interests of corporations, many developing
country members are certain that while there may be good intentions on the part of those pushing for rules, the implementation would certainly be used opportunistically to protect markets.
DEVELOPING COUNTRY DELEGATES ANGRY ABOUT BULLYING TACTICS
With so little demand for a new round by the majority of members, yet with the powerful countries desperate to push their agenda through, it is not hard to imagine that a host of underhand tactics are being used to force agreement, rousing anger and frustration amongst developing country delegates.
A representative of a Caribbean country in charge of agriculture for instance, had initially thought that the process of consultations for this Ministerial was fairly transparent compared to the last. This was until she heard that an agriculture text had emerged out of the blue without her participation or knowledge.
According to another delegate, an ambassador of a transition economy had wanted to attend a green room meeting on agriculture. He called up the WTO Secretariat, who promised that an invitation would be sent to him. He never received one.
Frustration towards the Secretariat is also surfacing. An African LDC delegate, talking about the reference in the declaration on LDCs asked: "Who is doing the drafting, the language which we don’t like and which we oppose every time? It is the Secretariat. Is he our friend? He is the director of the LDC division in the WTO, but does he have our interests at heart? Has he ever phoned me while drafting, to ask me if the language makes sense to me before it is on paper?"
Elaborating further on the process of consultations and drafting, he said, "What is basically happening is that we are negotiating with the Secretariat. The Chair does not sit and draft. He consults, but it is the Secretariat who writes. How representative is it (the Secretariat)? There is too much of Secretariat driving the process. Why do members have to leave such important things to the Secretariat? Why is the Director General allowed to behave like a member?"
Recounting his recent experience at a WTO meeting on LDCs and a proposal on the Integrated Framework, he commented, "We (LDCs) said we haven’t studied it (the proposal presented by Secretariat). But it was adopted. I wanted to make changes, but we were told there is no time. There is a propensity by the Secretariat to introduce things just there and expect you to endorse. But when it concerns developed countries’ interests, they say: ‘We have to refer to capital. We have just received it today’. They are rushing us. They want to make sure that the things which are not in their interests are pushed through quickly. But on their part, they want more time."
Many delegates are also concerned about the bilateral pressure that is put on their countries. Another African delegate had this to say on the matter: "Everybody says rules are important to poor countries, but the bilateral pressure they are using now is more powerful than the rules. If I speak out too strongly, the US will phone my minister. They will twist the story and say that I am embarrassing the United States in the WTO. My government will not even ask, ‘What did he say?’ They will just send me a ticket tomorrow."
He went on to elaborate how the powerful countries use bilateral pressure to instill fear, effectively silencing the majority. "It has worked and it works. That’s why a bigger number don’t speak. Why am I so fearful? I fear that bilateral pressure will get me, so I don’t speak, for fear of upsetting the master. To me, that threat is real. Because I am from a poor country, I can’t say what I want."
Convinced that the power-riddled WTO is more negative than positive for countries like his, he said: "I don’t like watching (developing countries) being cheated. At the end of the day, maybe it would be better for us to leave the WTO alone, go back and develop. Only when we have done that, then come back and join the WTO. It cannot be used as an instrument for development."
THE CRISIS NOW WORSE THAN PRE-SEATTLE
Why is the current situation more critical than that before Seattle? Even though there remains opposition, the stonewalling by developed countries is creating a dangerous scenario. By next week, it is likely that countries are basically pushed to the wall and either have to reject the declaration outright, or are silenced into accepting another raw deal.
There are several reasons for this more critical situation.
First, the Secretariat and developed countries have learnt from the Seattle experience. The 33-page draft consisted of positions of all groups on all issues, but was eventually impossible to bridge. The current draft is a much cleaner text with only a few brackets. The impression it gives then, is one of consensus even though the text is
opposed by many. During hard negotiations, however, there is considerably less room for developing countries to dissent. The argument that it is a finely balanced draft and that any substantial change will unravel the entire process of negotiations will be used to dissuade countries from making any significant changes. Their only other option of rejecting it in entirety could be too strident a position for most to take.
Secondly, the impact of the political climate after 11 September cannot be underestimated. Negotiations on this ‘grand coalition’ have spilt over into the trade arena. There is sentiment in Geneva that Zoellick’s rhetoric – a new round is needed to counter terrorism – is, as one diplomat commented, descent to the "lowest depths of trade diplomacy" he had ever seen. Yet it has been effective. Another government representative said: "It has been used very effectively by proponents to silence others. The atmosphere has changed. It has created a kind of wave so that fence-sitters have changed sides to take the easy option."
But a third and perhaps the most important reason is that the US and EU, unlike in Seattle, have joined hands and agreed even on the traditionally contentious issues such as agriculture. With their joint political might, opposition to a new round has become almost impossible. For example, Latin American countries (particularly those
in the Cairns Group) which would not have agreed to only an EU-led effort on a new round, are relenting. US’ pressure on them has been crucial.
There seems to be two different processes taking place at the WTO. One with those included in these Green Room meetings, and another, amongst those who are opposing and excluded. For the latter, things remain as they were in July / August this year. The majors are counting on their political might to pressure this second group – mostly LDCs, African group, the Caribbean countries and a few Asians – in the coming fortnight.
It is difficult to predict what the final outcome of the Ministerial might be, and this one with the added complication of the confusion and political sensitivities over the choice of venue. One thing is for sure though – developed countries have learnt nothing from Seattle, other than to sharpen their strategies in pressuring and stonewalling developing countries. In the process, they are unveiling the ugly power
politics crippling the multilateral trading system, which will result in grave implications for most of the developing world.
* Aileen Kwa is a policy analyst with Focus on the Global South. She is based in Geneva.