TRADE-DEVELOPMENT: Europe Lobbies The World Trade Organisation

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Shada Islam

GENEVA, May 18 1998 (IPS) - The European Union takes its campaign for a new global trade round to the World Trade Organisation this week, despite signs that the proposal will run into strong opposition from the United States and many developing countries.

EU officials said ahead of the WTO talks that EU trade commissioner Sir Leon Brittan will use the agency’s 50th anniversary celebrations to press his case for a “broad-based, open and comprehensive” new round of trade talks designed to inject fresh mom entum into the multilateral trading system.

A number of world leaders, including U.S. president Bill Clinton, South Africa’s Nelson Mandela and Cuban leader Fidel Castro are to attend the WTO celebrations and accompanying talks, beginning Monday.

The long-awaited festivities have lost some of their sparkle, however, because of the violence in Indonesia and regional tensions triggered by Indian nuclear tests.

Also, there is growing opposition both in the north and the south to globalisation and free trade. Despite a robust American economy, the U.S. public and the Congress have turned against trade liberalisation. Labour groups in Europe and Asia blame free trade for both their regions’ financial woes.

EU officials say that despite the poor omens, Brittan remains undeterred in his conviction that in addition to celebrating past achievements of the WTO and its predecessor, GATT (the General Agreement on Tariffs and Trade), the 132 WTO members must agree to launch a new “millennium round”.

“We have to ensure that the WTO has another successful 50 years,” an EU official said.

Still, the EU’s call for new global talks have so far failed to capture the world’s imagination. The United States says it wants further efforts to liberalise global trade, but prefers “sectoral negotiations” rather than one broad, all-encompassing rou nd.

Many Asian nations, grappling with their financial crisis, are wary of taking new market-liberalising measures. They are also worried that any further trade-expansion moves will make their efforts at economic recovery even more difficult.

“We have enough on our plate for the moment,” says a Malaysian trade official, referring to market-opening commitments made under the Uruguay Round, the multilateral trade negotiations which ended in 1994.

Asian trade experts say that implementing many of the Uruguay Round pledges into domestic rules and regulations is proving more difficult than expected. “A number of countries are just beginning to realise just what they had signed up for,” agrees Jacq ues Pelkmans, a research fellow at the University of Maastricht.

In areas such as financial services, intellectual property rights and anti-dumping, turning WTO commitments into national legislation can take years, he says.

But, others argue that by agreeing to launch a new millennium trade round, Asian and other developing countries will be telling the world that they have confidence in their economic future. “It will be seen as a sign that they are serious about economic reform,” argues Patrick Messerlin at the Paris-based Institute for Political Studies.

EU officials argue that further trade liberalisation is critical to prevent a recurrence of last year’s financial problems. “Call it preventive medicine for the future,” says Nigel Gardner, spokesman for trade commissioner Brittan.

In many ways, a new trade round seems inevitable. The Uruguay Round package commits the WTO to start negotaitions on further trade liberalisation in a range of sectors before 2000. These include trade in services, agriculture and trade-related intellectu al property rights.

In addition, the WTO has to review progress made by working groups on trade and investments, competition policy and government procurement which were set up by a WTO ministerial meeting in Singapore last December.

Also, the EU and the U.S. are calling on the WTO to start negotiations on a basic set of principles regulating electronic commerce – that’s goods and services traded on the internet. The idea, says Robert Madelin, an EU negotiator for the WTO, is to keep electronic commerce free of customs tariffs and duties.

“Whether or not you call these discussions a round is a question of semantics,” says WTO spokesman Keith Rockwell. “For some five or six discussions do constitute a round.”

EU officials also say that while the Uruguay Round may have succeeded in reducing traditional barriers to trade, a host of new issues have cropped up since that require the drawing up of WTO rules.

Subjects like the liberalisation of cross-border investment flows, competition policy and trade facilitation – ie removing bureaucratic barriers to trade – must be be discussed by the world trade body, they say.

The EU is adamant that instead of embarking on these negotiations separately, WTO members would stand to gain from a global round where they can barter one set of concessions for other trade advantages.

Just as the EU has drawn up its negotiating agenda, developing countries should come up with their own list of issues that they want discussed in the new round, says EU trade negotiator Karl Falkenberg.

“We are open to suggestions and are ready to discuss issues of interest to everyone,” he adds. “Developing countries are perfectly free to suggest subjects for negotiation.”

For many developing nations, there are four main areas of WTO interest: agriculture, textiles, anti-dumping policy and the free movement of persons. Developing countries would also stand to gain from a world-wide to remove industrial tariffs.

Members of the 15-strong so-called Cairns Group of Nations are hoping that the upcoming WTO negotiations will result in an end to all trade-distoring EU farm subsidies. According to the Cairns Group, which includes many farm-exporting developing countrie s, world subsidies on agricultural trade amounted to 280 billion dollars last year.

For many Asians and Latin American countries, a new round will only be attractive if the liberalisation of trade in textiles is also on the agenda. Textile and clothing exporters are unhappy with the implementation of the market-opening measures in the t extiles sector that are part of the Uruguay Round.

As part of the deal, the EU and the U.S. have agreed to abolish textile and clothing quotas in four phases, with total liberalisation of trade foreseen for 2005.

But exporting countries argue that Brussels and Washington are being very restrictive in phasing out textile and clothing quotas, with the result that the bulk of all textile restrictions will only be removed in 2005.

If quota elimination can be speede up under the millennium round, some Asians and Latin American countries may be persuaded to join the discussions.

Developing countries which are often hit by punitive anti-dumping duties in the EU and the U.S. may also have an interest in linking this issue to any future discussions on harmonising worldwide competition rules, argues Messerlin.

Also, the question of free movement of persons, allowing workers from developing countries to live and work in the north, could be put again on the WTO agenda. Finally, a removal of industrial tariffs by the EU and the U.S. will help boost sales of devel oping country goods in these markets.

Since new trade liberalisation talks appear inevitable – even if the millennium round idea never takes off – developing countries should start preparing a “positive trade agenda”, argues Victor Ognivetscz, a trade expert at the Geneva-based United Nati ons Conference on Trade and Development (UNCTAD).

The EU isn’t insisting on rapid decisions anyway. Brittan will urge WTO members to use the May 18 meeting to start preparations for the new round.

But, the actual decision to launch the discussions, EU officials say, should be left under a WTO ministerial meeting to be held in the second half of 1999. The round itself would then be launched on January 1, 2000.

“We will work towards a rapid, short round,” promises the EU’s Falkenberg. The EU admits that it’s ideas have run into resistance in Geneva.

But, that’s made Brittan and others even more determined to use the WTO meeting to run an intensified EU campaign in favour of the new round.