TRADE: Simmering Disputes Coming To A Head At WTO Meeting

By IPS Correspondents Reprint | | Print |

Johanna Son

MANILA, Dec 5 1996 (IPS) - A string of long-simmering fissures in the debate over the rules of world trade, which has split developed and developing countries, is expected to come to a head at next week’s meeting of trade ministers in Singapore.

Since the world’s governments agreed on a new set of trade rules in 1994, Northern and Southern countries have been sparring on matters like trade linkages with labour and the environment and a proposed global pact on investment.

These issues, industrialised countries say, will make for more and fairer international trade the world over.

But many developing nations view them as new issues that have no place in the World Trade Organisation (WTO), the trade body created at the Uruguay Round of the General Agreement on Tariffs and Trade (GATT) which will hold its first ministerial meeting in Singapore from Dec 9 to 13.

There, ministers from WTO’s 125 member countries are to issue a declaration on global commerce up to 2000. But so heated are the differences so far that negotiations on the accord in Geneva broke up last week with no consensus on ticklish “new issues”.

This sets the stage for possible fireworks at the WTO meeting.

“We want to talk about trade and trade only and, of course, investment,” Malaysian Prime Minister Mahathir Mohamad said last month. “Let’s keep extraneous matters out of the Singapore WTO meeting.”

Developing countries are trying to form a united front ahead of the Singapore meeting. They say the conference’s aim should be to review progress on the implementation of the GATT since 1994, and not to take on new subjects that divert the WTO from more urgent issues.

Rafidah Aziz, Malaysia’s international trade and industry minister, last month wrote Indian Commerce Minister B B Ramaiah to seek New Delhi’s backing in keeping extraneous matters off the WTO agenda.

Malaysia, India, and Indonesia are most vocal among some 90 developing-country members of the WTO in opposing a trend toward making more and more issues “trade-related” ones. The ambit of ‘trade-related’ matters grew sizably at the end of the Uruguay Round of the GATT in 1994, which led to the WTO’s creation.

Unlike in the past, rules on trade liberalisation now cover not just trade in goods but trade in services and protection of intellectual property rights as well. Said Rafidah: “Everything seems to be linked to trade these days.”

Developed countries would like early negotiations on labour standards in the WTO, saying core minimum standards should be in place to ensure workers’ rights and prevent those that exploit labour from gaining trade advantages.

But developing nations say this may be a protectionist gambit disguised as worker protection, arguing that trade sanctions must not be used to enforce labour and environment standards. Likewise, they worry that the avowed aim of protecting the environment, by penalising green-unfriendly goods or countries that make them, is a ruse to shut out their exports.

The desire to pursue a greener growth path and yet steer clear of falling into a protectionist trap is reflected in comments like those made by Philippine President Fidel Ramos recently.

“We in this region will be vigilant about trade barriers in the guise of environmental protection,” Ramos told the World Conference on Green Productivity Wednesday. “But we will also have to be vigilant about being left out in the emerging trade arena where the cleanest and greenest will become strongest.”

Rafidah says developing nations are not against environmental goals or protection of labour rights. “But there should not be any linkage of trade action — not just trade but trade action — with non-trade issues like human rights of labour standards. And the WTO is about trade action,” she said.

Another sticky point is a proposed agreement, backed by the U.S., European Union, Canada and Japan, on forging multilateral rules for fair treatment of foreign investors, protection of assets overseas and freedom to pull out any time.

But due to the difficulty of getting a consensus, U.S. officials have told Congress Washington is not pushing it as strongly in Singapore. Instead, the U.S. is working on getting a similar accord next year among the 27 industrialised nations in the Organisation for Economic Cooperation and Development (OECD), where there is no debate of the sort raging in the WTO.

The OECD accord would be open to accession by non-members, including some Latin American countries that seem keen on it. Thus, proponents say, the OECD pact can be a basis for global rules on investment, even without the backing of developing Asia or without progress in the WTO.

Developing countries cool to the investments accord say fixing global rules that give national treatment to foreign investors strips away the innate leeway that national governments have always had in shaping economic policy.

East Asia has been getting the lion’s share of foreign direct investments in past years, but some countries, like Malaysia, are also among the most vocal in opposing global investment rules.

Indonesia’s minister for trade and industry, Tunky Ariwibowo, says the country needs foreign investment, but “it is the concerned country, not the international forum, which has the right to decide on the kinds of investment and where investments could be done”.

But some WTO officials say Asia risks being passed up as an investment site if it stays out of efforts to increase protection of investments, as competition heats up for investment dollars.

Eight developing countries recently issued a statement urging the U.N. Conference on Trade and Development to review the effects of investment rule-making on developing countries before proceeding further on multilateral investment rules.

Lately, some industrialised countries said they do not necessarily want a final accord in Singapore but the start of an “educative process” on investment rules at the WTO meeting.

Similarly, U.S. Trade Representative Charlene Barshefsky said the U.S. is not seeking uniform wages or imposing protectionist measures on labour. She said Washington just wants to get a dialogue started on ‘core standards’ that most WTO members already endorse anyway, including the right to organise and bargain collectively and stopping child labour.

In the debate on the rules of the world trade game, little is heard about what developing countries, many of which had reservations about adjustment costs of trade liberalisation, want out of Singapore.

At the Asia-Pacific Economic Cooperation meetings, China’s Qian Qichen – the foreign minister of a country aiming to join the WTO – said there was too much focus on freeing up trade in sectors beneficial to developed countries and not enough on areas crucial to poorer nations.

If developed countries like the U.S. are seeking an accord to list all tariffs on information technology by 2000, developing nations are zeroing in on greater market for textile exports subjected to quotas in Western markets.

This week, Ariwibowo expressed Indonesia’s frustration over developed countries’ slow action on GATT requirements to abolish textile quotas. Pakistan is also leading an effort to speed up the phaseout of textile import quotas.

But despite vocal opposition by South-east Asian countries over trade and investment discussions in the WTO, unity among them may not be so easily forged this time. As host of the WTO meeting, Singapore has to be flexible and help look for a middle ground when the world trade debate is played out on its soil.