TRADE: Liberalisation Perseveres Without Multilateral Talks

By Gustavo Capdevila Reprint | | Print |

Gustavo Capdevila

GENEVA, Sep 22 2000 (IPS) - The process of trade liberalisation and opening of markets forges ahead even though multilateral negotiations on the matter have been at a standstill since the failed World Trade Organisation (WTO) ministerial conference in late 1999.

Industrialised countries are now implementing reforms they wanted, but through regional or bilateral accords, such as those the United States recently signed with Cambodia and China, or the European Union with its former colonies of Asia, the Caribbean and the Pacific (ACP).

The rulings handed down by the powerful WTO’s Dispute Settlement Body constitute other means of reaching these objectives, especially in the opening of markets.

Given this situation, more attention must be paid to the events in the regional and bilateral spheres, and we must abandon the belief that the only thing that matters is what happens in the WTO, charges Rubens Ricupero, secretary general of the United Nations Conference on Trade and Development (UNCTAD).

In the agreement signed with Cambodia, the United States was able to include clauses about several controversial issues – such as labour rights linked to market access – that have not found consensus in other multilateral negotiations.

Cambodia accepted the treaty with its explicit links between compliance with labour standards and the access of its products to the US market.

Another example is the November 1999 accord China signed with the United States as one of the top requirements for its entry into the WTO fold.

In that agreement, Beijing accepted the possibility that Washington could impose specific safeguards for 10 to 12 years on those products whose imports increase on the US market.

Ricupero commented that neither of the concessions – the so- called “social clause” or the safeguards – is covered by the WTO’s current rules.

China accepted the stipulation because in 1999 it had a favourable trade balance with the United States – to the tune of 67 billion dollars – and “has enormous interest in maintaining that presence” in the world’s leading market.

At a seminar organised in Geneva last week by the Third World Network, Ricupero concluded that the bilateral and regional accords, and often the cases heard by the WTO Dispute Settlement Body, “are more efficient methods than multilateral negotiations” in achieving market liberalisation.

A new mechanisms for trade reforms also stems from the Trade and Development Act passed last May by the US Congress, which contains a chapter evaluating the growth and opportunities offered by African nations, and other trade matters centred on the Caribbean.

To take advantage of what the US law offers, African countries must meet certain conditions, many of which these and other developing nations have already rejected in WTO negotiations.

Martin Khor, head of the Third World Network, said “the Act is thus an instrument to obtain support or agreement of African countries in those areas which the countries had already objected to or refused agreement in the WTO.”

Among the US law’s requirements for African countries are “a market-based economy that protects private property rights and an open trade system.”

The United States’ potential trade partners in Africa must also minimise government interference in economic matters via measures such as price controls, subsidies or state enterprises, according to the legislation.

Khor pointed out that these requirements “very much constrain a country’s ability to set its own balanced policy or strategy in relation to the government’s role in the economy,” and eliminates government autonomy in setting policy for the private sector or to implement social safety net measures.

Ricupero, meanwhile, echoed the commentaries frequently heard in negotiating circles about the expanding authority of the WTO’s dispute settlement system, which includes special panels and the Appellate Body.

Today, it is often more fruitful to utilise dispute settlement proceedings to gain access to markets than to rely on multilateral negotiations, said the Brazilian diplomat.

Carlos Correa, a jurist and expert on intellectual property rights, criticised the WTO dispute settlement panels and the Appellate Body for the power they have assumed.

Correa, who serves as trade adviser to several developing nations, called for the rigorous examination of the resolutions handed down by the WTO panels, which had not only declared their own jurisdiction over assessing and interpreting the provisions of trade treaties, but had also proclaimed their right to interpret the laws of individual nations.

The specific case Correa cited had been initiated by the United States against India for applying a provision of the Agreement on Trade Related Intellectual Property Rights (TRIPS). The WTO ruled in favour of the United States.

The consequences of the bilateral and regional accords are cause for worry, according to Ricupero. They show that unilateralism still has power and is on the rise, despite efforts to build a truly international system, he lamented.

At the last WTO ministerial conference, held in the US city of Seattle last December, the world’s finance ministers failed to agree on the convocation of a new round of international trade negotiations.

Attempts by the WTO and other multilateral forums since then have not had much success either.

The maximum financial authority of the United States, Alan Greenspan, chairman of the Federal Reserve, has agreed with WTO director-general Mike Moore in his scepticism that a new round of trade talks would be launched in the short term.