Campaign on Linkages

Events>Implementation Issues vs. Expansion of the WTO 

Symposia on linkages: How do we bridge the gap?
19th October 2001, Washington DC, USA

Symposia on linkages: How do we bridge the gap?
10th October 2001, London, UK

Implementation Issues vs. Expansion of the WTO 
March 24, 2001, New Delhi, India

Round Table: The Social Clause and Linkage at the WTO: What is at Stake?
December 16, 2000, New Delhi, India

CUTS’ Panel Discussion on Linkages: Are Trade Sanctions A Part Of Legitimate Instruments For Elimination Of Child Labour?
November 14, 2000, Durban, South Africa 14:30hrs-16: 30 Hrs

CUTS’ Panel Discussion: Labour Linkage From The view  Point of Trade Sanctions
June29,2000,Geneva

Planning Meeting Research on Child Labour
June 18, 2000, Jaipur, India

Report of the New Delhi Working Group Meeting
Implementation Issues vs. Expansion of the WTO
24 March, 2001

Background
Positive Political Strategy for India at the WTO, April 8, 2000
Competition Policy and Consumers in India, 26 August, 2000
The Social Clause and Linkage at the WTO: What is at Stake?, 16 December, 2000
Implementation Issues vs. Expansion of the WTO, March 24, 2001
Introduction
Presentation By Joe Cunnane
Presentation by Nripendra Misra
Comments and Suggestions
Clarification by Panelists
Conclusions

Background
CUTS Centre for International Trade, Economics & Environment (CUTS-CITEE), Jaipur launched a series of quarterly half-day discussions at New Delhi (known as New Delhi Working Group Meetings) to analyse the current issues in international trade and Indian economy ever since April 2000. The first meeting was held on April 8, 2000. The fourth event in the series of discussions was held on 24 March 2001. 

This document provides a summary of proceedings of the meeting held on 24 March and also a brief note on the three earlier meetings, which would stand as a backdrop of the present meeting. 

Positive Political Strategy for India at the WTO, April 8, 2000
The discussion focused on the developments which had taken place after UNCTAD X, which was the first major multilateral event held after the collapse of the World Trade Organisation (WTO) Ministerial talks at Seattle, where the functioning of the Bretton Wood institutions came under criticism by the participants for their unimpressive performance record in protecting the interests of developing countries.  Further, there had been hectic parley between the US and the EU to try to iron out differences of opinion on various contentious issues. They had also been increasingly targeting India to mobilise its support to launch a new round of negotiations under the WTO. 

The crux of the debate was the positive political strategy that India should adopt to extract to gain from the new WTO round.  The two discussants in this meeting were Mr. Sanjaya Baru, Professor, Indian Council for Research on International Economic Relations and Mr. B.L. Das, Former Indian Ambassador to the GATT/WTO. Mr. Pradeep S. Mehta, Secretary General, CUTS, moderated the discussion. 

Competition Policy and Consumers in India, 26 August, 2000 
This Round Table Discussion was organised against the backdrop of the submission of a report by the High Level Committee on Competition Policy and Law (HLCCPL) to the Government of India recommending, inter alia, the repeal of the existing Monopolies and Restrictive Trade Practices Act (MRTPC) and replacing it with a Competition Policy. The objective of the Discussion was to examine the recommendations of the report from the perspective of consumers. The Panellists were Mr. S. Chakravarthy, Member, (HLCCPL) and Dr. Sri Ram Khanna, Managing Trustee, Voice, New Delhi. Mr. Pradeep S. Mehta moderated the discussion. The Discussion highlighted the changes that are required in the proposed policy document to make it beneficial to different sections of the society. 

The Social Clause and Linkage at the WTO: What is at Stake?, 16 December, 2000
The objective of the Round Table meeting was to discuss issues pertaining to the persistent demands of some leading Western countries, labour unions, environmental and other NGOs to link market access rights of countries to labour standards through a social clause at the WTO. The Panellists were Prof. Jagdish Bhagwati, Arthur Lehman Professor of Economics and Professor of Political Science, Columbia University, New York, USA, Mr. Vinod Vaish, Secretary, Ministry of Labour, Government of India, and Professor Muchkund Dubey, former Foreign Secretary, Government of India. The discussion was led by Professor Bhagwati and moderated by Mr. Pradeep S Mehta. 

Representatives of trade unions, non-governmental organisations, government, inter-governmental organisations, media, academic and research organisations and business chambers participated in this discussion. There general consensus that emerged from the meeting was that the WTO was not the right body to deal with the labour standard issue. Moreover, overloading the WTO with non-trade issues will do more harm than good to the rule-based multilateral trading system. 

Implementation Issues vs. Expansion of the WTO, March 24, 2001 

Introduction 
The discussion was organised in the context of the preparations for a WTO Ministerial Conference in Qatar in November 2001, where implementation of the Uruguay Round Agreements will be a crucial matter for India and other developing countries. However, a clear difference seems to have emerged in the approach of developing and developed countries towards the main objectives of the Conference. On the one side, the developed countries want to expand the ambit of the WTO through a new round of negotiations. This is evident from their proposals to include many new issues in the agenda for the Ministerial Conference. As against this view, the developing countries want the WTO to first resolve problems in implementing the Uruguay Round Agreements. Further, most developing countries are against the launching of a new round in the next Ministerial Conference. 

The objective of the meeting was to discuss the various pros and cons of the twin issues of implementation and expansion of the WTO. Further, it analysed the problems faced by developing and least developed countries while implementing the existing agreements. Discussions also covered the possibility of launching a new round without resolving the existing issues. Representatives of government, non-governmental organisations, intergovernmental organisations, academic and research organisations and the media participated in this event. 

Mr. Nripendra Misra, Special Secretary, Ministry of Commerce, Government of India and Mr. Joe Cunnane, First Counsellor, Economic and Commercial, Delegation of the European Commission in India were the two key discussants in the panel. Mr. Pradeep S Mehta moderated the discussion. 

Presentation By Joe Cunnane
Mr. Cunnane started his speech by outlining the European Union’s  (EU) position on the proposed Ministerial Conference in Qutar. He said there is no inherent contradiction between implementation issues and expansion of the WTO framework. He expressed the need for a new WTO round to renegotiate the existing agreements, which require modifications as well as discussions on new issues. The expansion has two components: accession of new countries and deepening and widening of issues. Many implementation issues such as anti-dumping, TRIPS, etc. need to be sorted out through re-negotiation. So, there is a need for a new round if these issues are to be properly addressed. 

Implementation issues can be categorised in three groups: those that must be addressed before the launch of a new round, those that will form part of the agenda for the new round, and those that must be dealt with through re-negotiation. The EU is willing to give political commitments that issues of implementation will be addressed seriously but developing countries need to be realistic in their demands.

The EU has been the most forthcoming to developing country demands and interests in trade, he added. The main areas of concern for developing countries are textiles and anti-dumping. In textiles the EU is ready to consider further liberalisation but this could only be in return for increased market access. In anti-dumping and countervailing duties, the EU is willing to discuss the imposition of tighter disciplines. 

The EU is very keen to see that a new round of Multilateral Trade Negotiation (MTN) is launched at the forthcoming Ministerial Conference at Qatar. It wants new issues like Investment, Competition and Environment to be on the agenda of the new round. In investment the EU wants to have an agreement on general provisions on transparency and predictability. The approach should be plurilateral rather than multilateral. In this model, participant countries would make sector by sector commitments so that sensitive sectors can be excluded from the agreement.

In the area of competition policy, EU wants to have an agreement on anti-trust rules, and also extend the institutional cooperation between competition authorities and contribute to capacity building. Further, EU believes that developing countries should be given transition periods and sensitive areas should be excluded from its coverage. India would automatically comply with any agreement made at the multilateral level after implementing its new competition bill. 

Environment is not a new issue at the WTO. There are rules and cases related to environment, which were dealt by the WTO Dispute Settlement Body. The EU wants to see that the provisions on environment at the WTO are clarified by policy makers rather than by lawyers. There is also a need to clarify the relationship between the WTO and existing multilateral agreements on the use of the precautionary principle and eco-labelling. The EU is totally against eco-protectionism.

On trade and social development, Mr. Cunnane said that these two issues are very much related. It is very difficult to say that there is no relationship between trade and social development and hence there is a need for discussion. Further, the issue of labour standards should be kept outside the agenda for the new WTO Ministerial conference. 

Presentation by Nripendra Misra
Mr. Nripendra Misra, in his speech, emphasised that implementation issues must be resolved before the launch of any new round. He elaborated the reasons why the resolution of the former is a prerequisite for many developing countries including India to consider for a new round. At the Uruguay Round the developing countries made so many trade concessions without receiving a fair return. He pointed out that the cost of implementation is much higher for developing countries. They need to introduce structural domestic reforms in order to comply with the agreements, which have imposed heavy costs on them. Therefore, he affirmed that the past arrears should be settled first. 

There is a need to assess the gains and losses in the post Uruguay Round period. If unfinished tasks are resolved, this would be to the benefit of developing countries. In agriculture, steps were taken in the right direction, raising hopes that trade distortions could be removed. In textiles, the Uruguay Round raised hopes that developing countries would benefit as implementation was phased in and the system of quotas finally abolished by 2005. In return, developing countries bound their tariffs and the agenda was expanded to include Trade Related Intellectual Property Rights (TRIPS), Sanitary and Phyto-sanitary Measures (SPS), Trade in Services, Trade Related Investment Measures (TRIMS) and a new Dispute Settlement Procedure.

Before the Seattle Ministerial, developing countries drafted a common agenda, consisting of 94 points. These points were drawn from various existing agreements, many of which the developed countries have not implemented at the domestic level. Moreover, the special and differential treatment clauses should be made operational and effective.  The “best endeavour” clauses are not binding, merely a wish list. These are all related to implementation issues, which if not addressed properly, will cause the development deficit between the rich and poor countries to grow further.

Issues like anti-dumping, agriculture, harmonization, etc. need to be resolved well before the launching of a new round so that the confidence of the developing countries could be restored in the multilateral trading system. Resolving these issues requires political will and perhaps in some cases redrafting the existing agreements/clauses. In most cases it is a matter of delivering what is already there. Lack of progress is demonstrated in textiles and clothing where implementation could be made very quickly. But developed countries want to do it only in exchange of new concessions from developing countries.

After the Seattle fiasco, some constructive efforts were made for confidence building but the work programme to address implementation issues has not even begun. In the recent WTO meetings no developed countries made submissions regarding implementation of existing agreements. Out of the 94 points of common agenda, 92 are still unresolved. Progress was impeded by domestic political turmoil in US. However, the EU is making some efforts in this direction, including convening a meeting for developing countries. 

What direction should WTO discussion take now? Fatigue has set in in developed country attitudes toward implementation. Japan and the US are unwilling to engage in any discussion. They are trying to link implementation commitments to further concessions in a new round of MTN and accuse developing countries of using it as a delaying tactic to hold up a new round. This means that the concessions made by developing countries in the past are liquidated. 

India is very keen to ensure the success of forthcoming Ministerial Conference. Otherwise the multilateral trading system will be threatened by the proliferation of bilateral and regional trading agreements. Developing countries will be the clear losers if we move away from the multilateral trading system. India is well aware of the inequity of regionalism. 

Therefore, a new round should not be launched in the Qatar Ministerial Conference. Labour standards should not even be mentioned, as this will be the thin end of a pernicious wedge. Similarly, the WTO is not the right framework to discuss investment. A separate body should look into competition issues (this is also supported by US). New issues are not needed in the agenda.

EU should not try to launch a new round without congruence of views as this will only be harmful in the long run. The new institutional setting of the WTO means that at any time views converge on an issue and an agreement can be formulated. He also pointed out that no negotiation framework has yet been developed for any possible new round at Qatar. With just a few months left for the Ministerial, it does not seem to be feasible to have a new round. 

Comments and Suggestions
The participants raised a number of questions and made certain comments on the issues put forth by the panelists. This led to a lively discussion at the floor of the house. The following are the highlights of the discussion:

Suitable domestic policy is crucial if the opportunities opened up by trade are to be reaped and the
 concomitant threats are to be avoided. We need to focus on raising efficiency and competitiveness. This can be improved through technical assistance.

The diversity of developing economies makes it difficult to stick to a common agenda. After the entry of China, India will face a challenge to its position among the developing countries. There are problems of relative gains and competition between developing countries for developed country market share. No common agenda is possible but countries can cooperate on issues where they have common interests.

One should see multilateralism as a win-win situation for both developing and developed countries. In the absence of multilateralism, Regional Trade Agreements (RTAs) would flourish. In such a situation India would lose both to countries involved in regional trade agreements and to countries that are outside the WTO. It also loses out from concessions for LDCs, even though it supports these.

The unsatisfactory progress in integrating the textile and clothing exports of developing countries into the domestic markets of major quota countries was highlighted by many as a weakness of the multilateral trading system. 

The issue of the phasing out of Quantitative Restrictions (QRs) and the need to protect domestic industry also came up for discussion. It was the general view that India should not rely on undue protectionist measures and should not erect very high tariff walls, which cannot be justified. Moreover, too much protection damages consumer welfare and it does not stimulate competitiveness. It was also suggested that imports must be monitored closely when QRs are removed. 

Clarification by Panelists
While responding to the queries and comments, Mr. Cunnane said that EU will faithfully implement its commitments. There is no possibility that an extension will be proposed for commitments to be fulfilled. Sensitive products have not yet been integrated but there is a set date by which this has to take place and the EU will stick to it. If there had not been this flexibility in the timing of implementation, no agreement would have been possible. As regards the new round, it is less likely to be unfair to developing countries as developed countries are not able to dictate agenda. Issues that concern developing countries such as market access, movement of skilled personnel, TRIPS, etc. will be part of the agenda. 

On the question of developing countries’ unity, Mr. Misra observed that it is extremely difficult to maintain, as priorities are different for different countries. The special concessions to the LDCs may accrue some benefits to these countries, but they may also act as a hindrance to maintaining developing countries’ unity. 

While moderating the discussion Mr. Pradeep S Mehta, mentioned that there are some topics that deserve further attention and debate. The relationship between WTO and globalisation is one of them. Some NGOs are arguing that WTO should be shut down. We need to counter such kind of viewpoints and try to rebuild faith in the system. There need to be more recognition of Special and Differential Treatment and preferences for the poor countries. Time frames for implementation of agreements are often not realistic for countries at different stages of development. In agriculture and textiles, developing countries had hoped that liberalisation would lead to a rise in exports but it did not happen. We also need to look at the subsidies from the point of view of consumers. So far business interests have been given priority in trade negotiations at the cost of consumer interests. In this regard he emphasised the importance of involving civil society in the decision making process. The discussion of the future of the WTO needs to be held without bias or prejudice to lead to the right result.

Conclusions
There was a general consensus in the meeting that India and other developing countries should insist on solving implementation of existing agreements before the launching of a new round. The EU also does not want to overlook the implementation aspect but at the same time wants the expansion of WTO ambit through the launching of a new round. The meeting also highlighted the need for enhancing quality and efficiency to face challenges posed by globalisation and liberalisation. 

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