Bridges Ministerial Report #4 | WTO Ministers gear up for more debate on new trade talks

25 May 1998

WTO trade ministers agreed to hold next September a special session of the WTO General Council in order to draw up recommendations on the future work program, including a possible new round of trade talks. According to the ministerial declaration, the General Council is to develop recommendations for the third WTO ministerial scheduled for 1999, and should consider among other issues, issues related to the implementation of existing agreements and decisions; ensuring that trade negotiations agreed to under the Marrakesh Agreement-which established the WTO, get underway, and recommendations on the follow-up to the October 1997 High Level Meeting on Least-Developed Countries. The General Council is to also consider "other matters proposed and agreed to by Members concerning their multilateral trade relations," which could lead to a new round of trade talks.

The U.S. will play a key role in the preparatory process for the third ministerial, which members agreed would be held in the U.S. next year. U.S. Trade Representative Charlene Barshefsky said the U.S. had not yet taken a formal position on a so-called Millennium Round of trade talks. U.S. President Clinton, in his speech to the ministerial meeting last week signalled some commitment to a new trade round, although his remarks focused mainly on the timing of a new round. "We should explore whether there is a way to tear down barriers without waiting for every issue in every sector to be resolved before any issue in any sector is resolved." The U.S. wants to avoid the fate of the Tokyo and Uruguay Rounds that took ten and over seven years, respectively, to conclude.

EU trade commissioner Sir Leon Brittan first floated the idea of a Millennium Round earlier this year. Brittan said he was encouraged by Mr. Clinton's speech in Geneva last week. "I regard this as a step forward. It is a substantial step towards U.S. commitment to a round," he said. Another EU official said, "We were encouraged--and it really was beyond our expectation--that the word 'round' was used in [President Clinton's] speech. That shows an openness to the process that we welcome."

Developing countries are less open to a new trade round. African trade ministers last week issued a joint statement calling for a full assessment of the Uruguay Round--in light of African countries' experience, before expanding the WTO work plan.

African ministers acknowledged that the multilateral trading system had contributed to economic growth in Africa. The ministers' joint statement noted however that "our continent continues to be bypassed with regard to the benefits of the remarkable growth and greater global economic integration of recent years, and hence continues to experience marginalization from the global economy."

"The institutions and human resources for trade administration in our countries have been severely stretched by the demands of implementing our obligations and exercising our rights in the multilateral trading system," the ministers' statement said.

Also last week, WTO ministers agreed to consider how to improve the transparency of WTO operations.

LDCs call for market access, debt promises fulfilled

Ministers from the world's least developed countries (LDCs) last week called on developed countries to fulfil promises made regarding increased market access for LDC exports and reiterated concerns over the speed and scope of debt relief for the world's poorest countries. In a statement circulated by LDC ministers, the LDCs expressed "deep concern that the share of LDCs in world exports continues to be under 0.4 percent resulting in their marginalization in world trade."

LDC ministers urged developed countries "to give operational content" to the WTO Plan of Action adopted at the first WTO Ministerial in Singapore in 1996, and the High-Level Meeting of Integrated Initiatives for LDC Trade Development which took place in October 1997. In addition to enhanced flows of Official Direct Assistance (ODA) and zero tariff access for LDC products, LDCs called for "expeditious implementation of the special and differential measures in favor of LDCs as contained in the Final Act of the Uruguay Round." LDC ministers encouraged developed countries to increase trade-related technical and financial assistance, and recommended that financial support from finance organizations and donors focus on infrastructure development so to increase foreign investment in LDCs.

LDC ministers reiterated their concerns that debt relief initiatives on the part of developed nations remain inadequate. Ministers called the Highly Indebted Poor Countries (HIPC) initiative at the World Bank and IMF a step in the right direction, but warned, "the effectiveness of the initiative will depend on the speed and extent of its implementation." LDC ministers want more developing countries considered for the program.

In their ministerial statement, LDC ministers called for more time to comply with Uruguay Round commitments. In his address to the WTO Ministerial last week, South African President Nelson Mandela said an extension of time for developing countries to comply with WTO commitments would help promote the conditions necessary to support a multilateral rules-based trading system.

"The developing countries were not able to ensure that the rules accommodated their realities. For understandable reasons, it was mainly the preoccupations and problems of the advanced industrial economies that shaped the agreement. The sections dealing with the developing countries and the least-developed countries were not adequately thought through. Nor have they been fully implemented," Mr. Mandela said.

Mr. Mandela called on developing countries to lead the formation of a WTO agenda that fully addresses their needs. "[Developing countries] need to define precisely those areas that are obstacles to their progress in the world trading system. Free market access for the LDCs should no longer be the issue debated. It is rather the practical effects of implementing this that need to be incorporated into the multilateral system," he said.

Mr. Mandela addressed the thorny issue of labor and environmental linkage to trade. "There can be no refusal to discuss matters such as labor standards, social issues and the environment, but equally all must be prepared to listen carefully before judgements are made. If developing countries feel that there is nothing to gain except further burdens, then it will prove difficult to deal with these crucial matters."

During a working session on implementation of Uruguay Round commitments at the ministerial, India and a number of developing countries called on industrialized nations to speed up the elimination of quotas on commercially meaningful textile and apparel products. India along with Pakistan, Hong Kong, Kenya, Bangladesh and other nations complained that developed countries were not following "letter or spirit" of the Uruguay Round Agreement on Textiles and Clothing (ATC). Under the ATC, textile-importing countries such as the U.S. and EU agreed to a ten- year phaseout period for restrictions on textile imports. Developing countries agreed to the phaseout period, even though developed countries backloaded the most commercially meaningful products at the end of the phaseout period. Developing countries now worry that the U.S. and EU may lack the political will to carry out their commitments. Informed sources said that the working session on Uruguay Round implementation resulted in a "breakdown" between developed and developing countries.

Trade and environment showdown at Ministerial

In his opening address at the WTO ministerial last week, WTO Director-General Rennato Ruggiero called for "renewed political impetus" for the WTO Committee on Trade and Environment (CTE) in order to seriously address the issue of trade and environmental linkage. Mr. Ruggiero also promised increased dialogue between the global trade body and environmental groups in an effort to assuage environmentalist's fears that WTO rules threaten the environment.

U.S. President Bill Clinton in his ministerial address called for a high-level meeting of trade and environmental ministers to provide direction to future WTO environmental efforts, echoing a suggestion of the European Commission to the same effect. Three recent cases have placed once more the linkages between trade and environment in the international media's agenda: the ruling on the EU banana- import regime; the ruling on the EU ban on hormone-treated beef imports; and the very high-profile shrimp-turtle ruling on the U.S. ban on imports of shrimp caught without the use of so-called turtle-excluder devices (TEDs).

British Prime Minister Toni Blair last week told trading partners that protecting the environment is "perhaps the major challenge we face as we head toward the next century," and said that environmental protection should be incorporated into trade rules. Mr. Blair warned however that with regard to environmental and labor linkage to trade, "trade rules should not be used to impose unfair standards on developing countries, nor to discriminate against their exports."

G-8 blasted for lack of progress on HIPCs

International development agencies last week were enraged by the level of commitment--or lack thereof, from the Group of Eight industrialized nations toward enhanced debt relief for the world's poorest countries. 70,000 people marched on the G-8 Summit in Birmingham, England as part of the Jubilee 2000 campaign for debt relief, yet left disappointed as the G-8 failed to live up to expectations regarding the acceleration and expansion of debt relief.

The G-8, which includes the U.S., Britain, France, Germany, Canada, Italy, Japan and Russia, said in their communiqué that the group supports "the speedy and determined extension of debt relief to more countries, within the terms of the Heavily Indebted Poor Countries (HIPC) initiative agreed by the International Financial Institutions (IFIs) and Paris Club. We encourage all eligible countries to take the policy measures needed to embark on the process as soon as possible, so that all can be in the process by the year 2000. We will work with the international institutions and other creditors to ensure that when they qualify, countries get the relief they need, including interim relief measures whenever necessary, to secure a lasting exit from their debt problems."

Development agencies take issue with the G-8 position on at least two fronts. First, the HIPC initiative needs to expand its eligibility requirements to allow more poor countries to be eligible for debt relief: for example the HIPC initiative utilizes a debt to export ratio that poverty fighting groups argue is too high from a sustainability standpoint. Second, tying debt relief to HIPC policy reform puts the burden for debt relief on the backs of the poor, while money for education and health in poor countries continues to service debt while reforms are made.

The G-8 responded to the Jubilee 2000 campaigners in a declaration on less developed countries. "Debt relief in itself is no magic solution; it can only be part of the answer to achieving sustainable development. Where a country shows a real will to pursue policies that will relieve poverty and build a sound economy, we will do our part and contribute the funds necessary to reduce their debt burden to a sustainable level. This will ensure that the resources freed up are put to good, productive use, generating growth and bringing real benefits - in the form of better education, better health, and sound, honest government - to the poorest people," according to the declaration issued at the close of the Birmingham summit.

Andrew Simms of Christian Aid expressed his bitter disappointment in the G-8, saying, "It's Groundhog Day for the world's poor. Each year the G-8 pitches up promising to give meaningful debt relief to the poorest countries and each year they remain trapped in a world of aid dependency and disaster after disaster. [The G-8] has failed to understand that the target of halving world poverty by the year 2015 can only be met by more realistic debt relief; the kind of debt relief Germany received after the second world war."

During a major conference on North-South relations and sustainability held this week in Bern, Switzerland, former President of Tanzania and current Chairman of the South Centre, Julius Nyerere, asserted that the debt to export ratio in the HIPC was unreal and, hence, unattainable.

25 May 1998
In his opening address at the WTO ministerial last week, WTO Director- General Rennato Ruggiero called for "renewed political impetus" for the WTO Committee on Trade and Environment (CTE) in order to...
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