What is the GATT Project Bijal

8/13/2019 What is the GATT Project Bijal

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What is the GATT / WTO?

GATT was set up after World War II as an international contract that set rules for world trade. It

was a landmark agreement bringing trade into a multilateral context, rather than having trade

between countries remaining the business of the two or more countries involved.

In its first forty years of existence, GATTs prime emphasis was on the expansion of trade

through the reduction of tariffs. !eriodically, the GATT signatories would meet and negotiate

tariff and "uota rules for trade in products. #y the $%&'s, some other issues were included in the

GATT. These came in the form of (odes. #ut the (odes were mostly subscribed to by developed

countries. )ery few developing countries *oined in as they found the new disciplines too severe

or did not perceive enough benefit accruing to them.

+owever, things changed radically with the advent of the ruguay -ound in $%/, and the

subse"uent setting up of the WT0 in $%%1. At the start of the ruguay -ound, developed

countries decided that several areas other than trade in goods had assumed great significance in

their economies. They therefore proposed these sub*ects for a new round of negotiations in the

GATT. These were services, investment, and intellectual property rights. They were successful

in the ruguay -ound to introduce disciplines in two of these areas 2 intellectual property rights

and services.

3ust within a year after the completion of the ruguay -ound, the ma*or developed countries

have already tried to bring further new sub*ects into the agenda of the WT0. These have been

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investment 4again5, labour standards, transparency in government procurement and competition

policy.

The WT0 is a much stronger institution than the GATT. 0ne main reason is that it has a dispute

settlement system so that countries can take their trade grievances to the *udicial court there.

#ased on this promise of ensuring that rules of fair trade are carried out, the ma*ority of countries

in the world 2 developing and developed 2 are members of the WT0.

nfortunately, despite these noble ob*ectives, the power play between the strong and weak

economies that take place in bilateral trade relations also prevail in the WT0, and in fact are

institutionalised in the WT0. The rules of the WT0 remain imbalanced and biased in favour of

the developed countries, and more specifically, in favour of the corporate interests of developed

countries.

This is a simplistic, but visual analogy of the WT06

(ountry members are called to a game of soccer. +owever, in this soccer game, unlike the usual

soccer game, there are 7 teams, not 8. The age range of members are also very different. 0ne

team of players are 8' years of age. The other team, ten years of age and the last team 1 years of

age.

The rules of the game are mostly determined by the oldest and most experienced team 2 the 8'

year olds. And often, in this soccer game, the team members come up with more and more new

rules for which all the teams must abide by. They sometimes call themselves the 9A:

4coalition of ;,


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The younger teams are given some concessions 2 the $' year olds have a few concessions and the

1 year olds a couple more concessions. =or example, these two teams are given a few more turns

at having the ball.

Apart from which, however, all players are treated e"ually and all 7 teams play together. It is

found that the older team scores most of the goals 2 % out of $' goals. 0ften the oldest team also

plays a dirty game 2 team members push and shove the younger players when they are not

supposed to. 0ccasionally, the younger team points this out to the referee and the younger team

is compensated, but this is rare. >ore often, the bullying continues but the younger teams are

threatened to keep silent, otherwise they would be beaten up in the changing room. In fact, often,

the older team complains about the unruly behaviour of the younger team and are compensated.

The other dimension in this game is that the experienced players have huge reserves of

manpower and they change their players fre"uently, so that the players are not tired out and can

play well. In contrast, the youngest team have only a small group of players, have no reserves for

back2up and have to take part in this soccer game that 4unlike real soccer5, does not end 2 it goes

on and on and on.

The outcome of the game? 0f course almost all the goals are scored by the oldest team. The $'

year olds very occasionally makes a couple of scores, but end up loosing out as well. The

youngest team is completely defeated.

This is over2simplified, but gives the gist of the power politics at the WT0 today and the bleak

picture for developing countries.

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What type of Development is Implicit in the WTO Agenda?

Why do I paint such a gloomy picture of the WT0? I do so because the development model

implicit in the WT0s agenda, is one that has already been tried in many parts of the developing

world, including our region 2 with disastrous results. And the WT0 in fact is taking it even

further than what has already been pushed on developing countries.

The ground work for the WT0 had already been laid in most developing countries. These

countries in the &'s, 's and up till today are either strongly encouraged or arm twisted into

taking on board certain policy options. The policies typically included6

$5 the removal of protective tariffs which directly endangers local industry

85 the removal of rules controlling foreign investment, which ushers in the foreign domination of

local industry

75 the conversion of self2sufficient, small2scale diverse agriculture to corporate export2oriented

monocultures, which severely threatens the food security of local populations

@5 the elimination of price controls

15 the drastic reduction in social and health services

/5 the aggressive privatisation of government agencies which renders social services inaccessible

to the poor

&5 the ending of popular import substitution programmes that encouraged local people toward

diverse local production and self2sufficiency.

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Bet me elaborate on some of the characteristics of this development model6

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And with the devaluation of the baht and the financial crisis 2 it is as if the wool has been pulled

off our eyes, and we see with clarity, the fragility upon which wealth had been built. The poverty

that had already existed before the crisis, is of course now further aggravated with the devalued

currencies and widespread unemployment.

This economic model that is promoted is bringing about the champagne glass civiliEation,

where the gap between the rich and poor is widening. Today, the rich are really the corporations

and a minority of people who benefit from this corporate and profit2driven globalised economy.

In this champagne glass civiliEation,

the top 8' per cent of humanity, controls 7 per cent of the worlds income, and the bottom 8'

per cent survives on only $.@ per cent. The gap in the distribution is growing... 4An nwanted

(hild Grows p $%%1F 775.

;eventy per cent of global trade is controlled by *ust 1'' corporationsF and a mere $D of the

TC(s own half the stock of foreign direct investment.

The new trade agreements can only greatly accelerate corporate concentration and increase

corporate power in relation to nation states. As an analyst has commented, This is one of free

trades main purpose.

+ow is this development agenda sold to the developing world? +ow is it people have bought into

it? Amongst the many reasons, one crucial argument that has gained wide currency is the G:!

argument. When countries focus on industrial development and on exports rather than production

for their own subsistence and self2sufficiency, G:! increases. The logic is that when G:!

increases, wealth increases and this wealth will trickle down to the average person on the street.

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Various WTO Agreements: Issues of oncern

$5 Textiles and (lothing

This area is of crucial interest to developing countries. At the time of the ruguay -ound,

liberalisation of this sector was cited as the area developing countries would benefit most from.

;ome even estimated that the earnings of textile exporting countries would increase by over

;7'' billion.

The ; and


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85 Anti2:umping

0ver the last $128' years, anti2dumping has been used by the developed countries as an

important instrument of protectionism. :eveloped countries have persistently initiated

investigations regarding the same products exported by developing countries. In doing so, they

have demanded information that is difficult and expensive for developing countries to furnish.

=urthermore, when a case is taken against a developing country, even if the developing country

is found not to be in the wrong, the country pays heavily since it suffers the sudden loss of a

market. Albeit this is only for a few weeks while a challenge is considered, it can be devastating

for fragile industries, or for countries that are heavily dependent on a few export products.

It is also difficult for most developing countries to take on the developed countries in this area.

=irstly, they need to prove that the other party has caused significant in*ury. :etailed and highly

technical information need to be collected to prove this in*ury. ;imilar to the dispute settlement

system, the process is very costly.

75 The Agreement on ;ubsidies

>ost types of subsidies applied in developed countries such as those relating to research and

development, adaptation of environmental standards etc, have been non2actionable, whereas, the

subsidies normally used by developing countries for their industrial development and export

development have not been given this treatment.

;imilar to the anti2dumping agreement, to lodge a case re"uires highly technical information and

costly legal expertise. These processes should really be simplified and there should be ade"uate

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legal and advisory services available in the WT0 to ensure that developing countries are able to

use the system.

@5 Trade -elated Investment >easures 4T-I>;5

In this area, the agreement specifically prohibits enforcing domestic content re"uirement, as that

is contrary to the obligations of the national treatment principle. +owever, this is vital for

developing countries as it encourages6

a5 the use of domestic raw materials, hence saving scarce foreign exchange

b5 the creation of additional domestic employment

c5 the growth of general domestic economic activity

15 Agriculture

The Agreement on Agriculture has really been about selective deregualation of agricultural

products, so that the large exporting countries, particularly the


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The conse"uences are detrimental to the food security of developing countries, since local

production to support local food needs are severely at risk and many low2income countries and

people will not have sufficient financial resources to purchase even the basic foods they re"uire.

:eveloping countries in turn are being strongly advised by the international financial institutions

to venture into the export markets 2 in cash crops, luxury fruit and vegetables, cut flowers etc.

This type of crop conversation especially to luxury items has met with tremendous problems. It

has led to many farmers being left with large debts since it re"uires large capital outlay.

/5 Intellectual !roperty

T-I!; introduced sweeping and overwhelming opening of the patenting of life forms that

brought the world in line with ;2style patenting system. This system has allowed corporations

to patent the natural biological resources of many communities and countries. Co compensation

is paid to the indigenous population which may have nurtured these species for a long time.

#ecause of the action of CG0s such as Third World Cetwork at the time of the ruguay -ound,

Article 8&.7 4b5 was included into T-I!; to allow local communities to use their own systems of

protecting their seeds, plant varieties etc. #ut this sui generis article is now being reviewed and

local systems of intellectual property rights protection are seriously being threatened. The ;

government, this year, is working to get local control eliminated.

&5 ;ervices

The motive for including services into the GATT and now WT0 is so that the businesses of the

developed countries can have legal permission to take over the service sectors in developing

countries 2 insurance, movies, shipping, banking, airlines, telecommunications etc. The opening

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up of our service sectors will deprive developing countries economies the opportunity to

naturally evolve and gain strength in these areas. It will deprive developing countries of the right

to diversify and strengthen their economies.

=ollowing the ruguay round, the following issues under the services sector were on the tables

for discussion. These included the movement of natural persons, financial services, maritime

transport services, basic telecommunications etc.

The area of greatest interest to the developing countries 2 the movement of natural persons as a

means of providing services concluded in 3uly $%%1, but with insignificant results for developing

countries. +owever, negotiations on financial services and basic telecommunications have since

been concluded.

:eveloping countries do not stand to gain from these agreements. They have no export interest in

financial or telecommunications services. +owever, they have been pressurised into making

concessions in these areas, by allowing the entry of these services into their countries.

5 embers from imposing an entry tax on commercial transactions

conducted across borders by electronic means. =or the moment, it does not affect developing

countries since most developing countries do not conduct their trade through electronic means.

+owever, it is likely that this is an area will be expanding and in time, it will be a commonly

used mode of trade especially by developed countries. #y that time, developing countries would

be deprived the right to collect taxes and increase their much needed government revenues.

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%5 Government !rocurement

>ost governments give preference to buying from local suppliers. In fact, using tax dollars to

purchase goods and services from local companies is, in most countries, a key governmental

policy tool aimed at strengthening the local economy or industry.

As much as @'21'D of GC! 4if we factor in schools and services5 come from government

procurement. #ringing government procurement into the WT0 means forcing governments to

abandon the practice of buying from local sources. It means allowing much greater penetration

of developed countrys corporations into our economies. Governments will have to allow e"ual

treatment of domestic and international companies for providing the government goods and

services. It means giving up control and the ability to nurture and strengthen local enterprises.

The flip side of the coin6 developing country companies will not be poised, on the contrary, to

enter the developed countries and provide the re"uired supplies for government procurement

contracts there.

$'5 =orestry

This is the newest issue that may be added to the WT0. There was an attempt at the last A!


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As a result of strong citiEen activism, the >AI negotiations were stopped from being passed in

the 0AI was then moved to the WT0. The >AI is about corporations being

given national treatment 2 that is, they must be treated the same way local companies are treated.

This will be highly detrimental to the economies of the developing countries, which would be

literally taken over by developed countries corporations.

In ;ingapore, many developing countries were strongly against the inclusion of investment into

the WT0. +owever, India, which was a lead opposition country buckled under and agreed to the

setting up of a study2group on investment. It would be interesting to find out what went on

behind the scenes before India changed her position.

$85 :ispute settlement system

The dispute settlement system has been acclaimed as one of the most significant achievements of

the ruguay -ound. +owever, since $%%1, it has been used mainly by the developed countries.

There have been about $1' cases since $%%1. The ; alone is responsible for initiating about 1'

cases and all the developing countries, together, have initiated about @'.

And while developing countries have won some of these cases, the fact remains that the system

is weighted heavily against developing countries. 0ne of the main reasons being that the

procedure is very costly. :eveloping countries do not usually have the legal expertise to handle

the cases on their own and would have to incur heavy expenses in hiring legal expertise from

abroad. They therefore need to weigh whether it is wise to even take the matter to the dispute

settlement process.

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As mentioned earlier, the other area working against developing countries is that if the country in

the wrong does not take the necessary corrective measures, countries have the right to take

retaliatory measures e"uivalent to the losses which the country has suffered. =or small

developing countries, this bottom line of retaliation, is impractical, politically and economically.

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!" WTO and developing countries

#"!" Introduction

As the :oha -ound trade talks floundered, there have been increasing criticisms of the behavior

of the rich and powerful countries during the numerous series of negotiations. ;everal influential

countries were accused of trying to manipulate other weaker contracting parties to go along with

their proposals. There are also increasing concerns by some developing countries that due to the

asymmetriceconomic, political and diplomatic powers between the powerful parties and the

relatively powerless members, the world trading system as coordinated and implemented by the

World Trade 0rganiEation 4WT05 is fundamentally unfair. 0ut of frustrations, some analysts

and researchers even suggest that developing countries may actually be better off without the

WT0. These views are often reinforced by pronouncements by non2governmental organiEations

4CG0s5 in developed as well as in developing economies that the WT0 and the :oha -ound

negotiations facilitate a global trading system that exploits the poor, particularly the poor in the

relatively weak economies. While the focuses of the barrage of criticisms of the global trading

system from CG0s and from the developing countries are often very diverse, ranging from

unfairness and exploitations to issues concerning the environment, labor and human rights, one

common theme is that the WT0 as an organiEation that mediates the global multilateral trading

system is increasingly acting as a forum used by the rich and powerful to exploit and harm the

poor and the weaker members.

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The World Trade 0rganiEation 4WT05 has become an important instrument of globaliEation in

the world today. The ma*or developed countries have put their full weight behind it. They have

already used the multilateral financial institutions, viE., the World #ank and the International

>onetary =und 4I>=5, to influence the economic policies of the developing countries in the past.

These two organiEations have considerable clout as a large number of the developing countries

have to depend on them for financial support for development and for tiding over their foreign

exchange problems. These institutions are mainly guided by the developed countries in the

formulation of their policies and prescriptions, since the decision2making therein is through a

weighted system of voting, in which the countries with higher financial contributions have been

assigned more votes. The system of decision2making in the WT0, however, is different. +ere

each country has one vote, and there is a provision for decision2making by ma*ority voting if it is

not possible to reach consensus. The developing countries outnumber the developed countries in

the WT0 by nearly four to one. And yet, despite all this, it is the developed countries which are

the main engines of the work in the WT0, while the developing countries are almost always on

the margins. The developed countries initiate the sub*ects for negotiation and take the lead and

initiative in the course of negotiations. The developing countries, on the other hand, are almost

always on the defensive, trying to minimiEe the damage arising from the negotiated agreements.

It is important for the developing countries to reverse this process, lest their progress on the

development path continues to be constrained. They have to be particularly careful now, in the

context of the pressures being exerted to launch a new round of negotiations in the WT0. The

main driving force behind the ma*or developed countries in the WT0 is their interest in

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expanding the space for their economic entities, particularly in the developing countries. The

doors are already "uite open in the developed countriesF hence they do not have to worry about

entry there. #ut the developing countries which present vast opportunities are still very much

untapped. +ence these areas are sought to be pried open for their operation. The economic

entities in the ma*or developed countries exert considerable pressure on their governments to

take effective steps in this direction. And the WT0 is considered to be the natural instrument for

this purpose. The ma*or developed countries have found, through their experience, that they can

conveniently achieve their ob*ectives in the WT0. >oreover, the organiEation has an effective

enforcement mechanism in the form of its integrated dispute settlement system, within which

perceived obligations under the various WT0 agreements can be enforced with the threat of

restrictions on the import of goods. This is an effective threat to the developing countries as such

punitive moves can disrupt their exports in the few sectors where they are competitive. The main

reason why the developed countries are able to get the desired results in the WT0 is that they are

clear about their ob*ectives, have good coordination among them to achieve those ob*ectives and

use their full strength in this process. The political and economic clout of their governments as

well as the technological and economic muscle of their firms *oin together to push ahead to get

the benefits they seek. :ifferences do sometimes arise among themselves on some issues, but

when it comes to getting concessions from the developing countries, the ma*or developed

countries always combine together. The ruguay -ound of negotiations is an important recent

example, where the ma*or developed countries moved together and gained big concessions from

the developing countries, despite there being mutual differences among themselves on some

issues. The latest example of their *oint pressure is the current call for a new round of

negotiations, under which they expect to start negotiations on new sub*ects with the main aim of

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obtaining further concessions from the developing countries, as will be explained in some detail

later. Two decades ago, the developing countries were not exposed too much risk from the

developed countries acting as the prime movers in the General Agreement on Tariffs and Trade

4GATT5 forum, which was the predecessor of the WT0. The developed countries did not expect

many concessions from the developing countries in those daysF the negotiations were mainly

about concessions among the developed countries. #ut the discussions and negotiations during

the last two decades have been focused mainly on getting concessions from the developing

countries.

#"#" $AD %&'%(I%)% O* D%V%+O'I)G O,)T(I%$

#ecause of extreme pressures exerted by the developed countries, the ruguay -ound ended

with highly imbalanced results, with the developing countries making most of the concessions

and the developed countries hardly making any significant concessions to them. It is by now

"uite clear that the WT0 agreements, which came out of the ruguay -ound, are full of

imbalances, ine"uities and deficiencies. The developing countries have repeatedly been drawing

attention to these adverse features over the last four to five years

.

Grave Disappointment in $ome Areas

The most positive features of the WT0 agreements for the developing countries appeared to be

in the areas of agriculture, textiles and dispute settlement. >any developing countries were

persuaded to accept the agreements mainly because of the presumed benefits in these areas.

+owever, these expectations have not been realised in practice, nor is there any hope of much

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benefit flowing to the developing countries in these areas in the near future. In fact, in the areas

of agriculture and textiles, the developing countries have good reason to feel cheated. In

agriculture, the developing countries had expected that their market access prospects would

improve. #ut the ruguay -ound commitments and their implementation by the developed

countries have belied all such hope. The developed countries put prohibitive tariffs on many

products and enhanced their domestic subsidies.


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distorting the agriculture trade, like the developing countries. The story of domestic agricultural

subsidies is even more striking. The subsidies were broadly categorised into two groups. The

subsidies in one group were together re"uired to be reduced over a given period of time, whereas

those in the other group were not sub*ect to the reduction re"uirement. While the ma*or

developed countries fulfilled their commitment of reducing the reducible subsidies, they also

cleverly raised the other type of subsidy by a huge margin. As a result, the total level of domestic

subsidies was actually increased rather than reduced. Thus, the

Agriculture Agreement and its manner of implementation have in fact led to enhanced distortion

of agriculture trade by the ma*or developed countries. In textiles, the picture is a similar one. The

ma*or developed countries have technically fulfilled their obligation to liberalise their imports,

but in effect they have really not liberaliEed except to a small extent. nder a regime introduced

in derogation of GATT to provide protection to the textile industry of the ma*or developed

countries, a large number of developing2country textile products have been under import

restraint in these countries. The WT0 Agreement on Textiles and (lothing stipulated that the

developed countries would progressively liberalise, in increasing percentages, these imports in

stages. In actual practice, however, the liberalisation of the restricted products has been to a

much lesser extent. This has happened because the base for the calculation of these percentages

is a list of products included as an annex to the agreement. This list contains a large number of

items which were never in fact under restraint. It is mostly these unrestricted items that have

been included by the developed countries in their liberalisation programme. Thus, the restricted

items, except for a small percentage, still remain restricted. The developing countries, which

were the sole targets of the import restrictions, continue to be the victims of trade discrimination

in this sector. In the area of anti2dumping, the developing countries had been the victims of

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harassment for a long time. It was expected that with the tightening of the rules in the WT0

Anti2:umping Agreement, the situation would improve. #ut the harassment of the developing

countries through anti2dumping actions on their exports has continued in some ma*or developed

countries, sometimes through repeated actions on the same or similar products. An area of great

hope for developing countries was the WT0s enforcement mechanism, i.e., the dispute

settlement system. It has provided some relief to the developing countries against unilateral

action and harassment, when they have been able to raise a dispute and pursue it through the

panel and appeal process. #ut they are considerably handicapped because of the high cost

involved, both in raising a dispute and in defending one. They do not have domestic expertise on

this matter and have to depend almost entirely on the legal services of experts from the ma*or

developed2country centers. What has been particularly disappointing to the developing countries,

moreover, is that the panel and appeal processes have been almost totally ignoring their grave

concerns on important procedural matters and have also been giving interpretations which are

substantially modifying the rights and obligations contained in the WT0 agreements.

Ongoing 'rocess of onstraining -ar.et Access

Another concern of the developing countries has been the formulation of standards which may

affect their market2access prospects on a continuing basis. !roduct standards are being fixed by

the International ;tandards 0rganisation, and, in respect of sanitary and phytosanitary matters,

by the (odex Alimentarius. These were generally voluntary standards in the past. Cow the WT0

agreements give primacy to these standards, in so far as a country has to *ustify its standards if

they are different from those set by these bodies. Thus, there is a degree of obligation involved

for countries in respect of these standards. :eveloping countries are worried about these new

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obligations, which have arisen without their effective participation in the standard2setting process

in these organisations. The developed countries and transnational corporations have a generally

good presence in these bodies, but the developing countries are mostly left out as they do not

have the ade"uate financial and human resources to be involved in the process of standard setting

there. Thus, they have no effective say in this process. (onse"uently, the standards set by these

organisations do not generally take into account the experience of the developing countries and

the special situations of these countries as producers and consumers of the products. The

standards may sometimes be too stringent from their point of viewF in that case, their market2

access prospects in other countries may be undermined. This apprehension is further enhanced

by the enthusiasm in many developed countries for the use of standards as a protectionist

instrument.

ostly Implementation

Jet another point of concern in the developing countries is the complexity and difficulty in

implementing the various WT0 agreements. ;ome agreements re"uire the formulation of

legislation and regulations as well as the establishment of mechanisms for various purposes.

>any developing countries do not have ade"uate skill and financial resources in this regard.

;ome calculations have shown that it is a very costly process. =urthermore, there are some

obligations, like the prohibition, under the Agreement on Trade2-elated Investment >easures

4T-I>s5, of the domestic2 content re"uirement, which have serious adverse implications for the

development process of the developing countries. These countries are finding it difficult to

adhere to the time frame for undertaking such obligations, and stand the risk of trade retaliation

for non2fulfillment. In respect of many obligations, the actions re"uired for implementation have

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to be taken at various levels in a country. Thus, not only the central government, but also the

regional governments and local bodies, have to adhere to the disciplines of the WT0 agreements.

If they are not able to do so, the central government is held responsible in the WT0 for the

default, and it may have to pay a price through the dispute settlement route if a complaint is

raised. The ability of the developing countries to train the officials of the regional and local

administrations is limited. Also, it is very difficult for them to collect information from the

widely dispersed centers of these authorities, which is necessary to enforce the implementation

of the obligations.

$pecial Interests Ignored

The developing countries are disturbed that the special provisions in some agreements

incorporating their interests to some extent have not been given due attention. In particular, the

General Agreement on Trade in ;ervices has the ob*ective of expanding the services supply

capacity in the developing countries. It also has a stipulation that the developing countries may

liberaliEe fewer sectors and fewer transactions in services. #ut these provisions have not been

ade"uately implemented in actual practice. In fact, there has been insistence that some

developing countries accept far more onerous obligations in some sectors, particularly financial

services, than they were prepared to undertake.

Bikewise, the Agreement on Trade2-elated Aspects of Intellectual !roperty -ights 4T-I!;5 has

the ob*ective of encouraging the technological development of the developing countries. #ut

steps to realiEe this ob*ective have not materialiEed in any concrete form in the policies or actions

of the developed countries. The main reason for not putting these principles and ob*ectives into

actual practice is that there are no direct and specific obligations in the agreements on the

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developed countries to take some specific measures in this regard. Thus, there is no specific

enforceable provision which can be

#"" *AI)G T0% 0A++%)G%$ I) T0% )%A( *,T,(%

hanged Approach of Developing ountries

;igns have already emerged that the developing countries are starting to change their approach in

the WT0. The year $%%% was the watershed. :eparting from their earlier stance of merely

responding and reacting to the proposals of the ma*or developed countries, they decided to be

proactive. They gave deep thought to the deficiencies, imbalances and ine"uities in the WT0

agreements and their implementation, and decided to take the initiative to correct the situation.

They coordinated among themselves and prepared well. =inally they came up with a large

number of proposals under the general heading of Himplementation issues. This was an

important input to the preparatory process for the ;eattle >inisterial meeting of the WT0 in

:ecember $%%%. In the final stages in the run2up to ;eattle, attempts were made by some "uarters

to ignore these proposals by keeping them out of the text to be submitted to the meeting. #ut the

developing countries determinedly persisted and got their proposals included in the text. It was a

significant achievement, considering their passive and defensive role in the past. p till now,

however, the ma*or developed countries are not prepared to work on these proposalsF they say

that these would entail amending some agreements, which should rightly only be taken up in the

course of a new round of negotiations. In this manner, they are trying to strengthen their case for

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launching a new round, which has been pursued by them for more than a year. They forget that

ma*or new commitments have been taken in the WT0 at their instance in the last few years as

mentioned above, without a new round having been launched. The developed countries would

like to address a few of the easier implementation issues in a superficial manner and then

sweep this matter off the WT0 table. #ut the developing countries are very much united on

pursuing these proposals. It has become their common platform. They also have the moral

*ustification in insisting on correcting the deficiencies, imbalances and ine"uities in the current

agreements on a priority basis before embarking on any new negotiations. 0ne visible effect of

these proposals is that the momentum of the new issues has slowed down, though there may be

other reasons for it too. The developing countries are aware of the importance of their proposals

and have been consistently pressing for decisive and meaningful consideration thereof as a

priority.

Agenda of Developed ountries

The agenda of the ma*or developed countries is to launch a new Hcomprehensive round of

negotiations in the WT0, which means that the new sub*ects proposed by them at the >inisterial

meetings of ;ingapore 4$%%/5 and Geneva 4$%%5 should be taken up for negotiation. These

sub*ects include6 investment, competition policy, government procurement, electronic commerce

and labour standards. 0f course, there are varying degrees of intent among the ma*or developed

countries on these issues. The ; is not keen on taking up the sub*ect of competition, while it is

the main champion of the sub*ect of electronic commerce. The


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be less enthusiastic about investment. The developing countries generally are opposed to the

launching of a new round. Their main concern is that it will involve negotiations in new areas,

which will put their own priority sub*ect of improving the existing agreements on the

backburner. Their case is that their proposals have been placed on the basis of their experience of

the workings of the agreements for the last six years and must have priority over consideration of

the new sub*ects. They also argue that sub*ects like investment and labour standards do not

belong in the WT0 and as such should not be covered by negotiations in this organisation. There

is, of course, a more basic reason behind the developing countries opposition to the new

sub*ects. They apprehend that through each of these sub*ects, the developed countries will be

pushing ahead with their interests, curtailing the discretion and constraining the development

efforts of the developing countries and using new tools to restrain exports from the developing

countries.

-ain *ears of Developing ountries

All the sub*ects proposed by the ma*or developed countries for negotiations cause grave fear

among the developing countries. =or example, they apprehend that negotiations on investment

will be geared towards ensuring unrestrained entry and operation of developed2country investors

in the developing countries. The current WT0 agreements have already ensured expanded

opportunities for the farmers, manufacturers, exporters, service providers and technology

providers of the developed countries in the developing countries. The proposed negotiation and

agreement on investment is aimed at extending the benefit to their investors. It is feared that the

agreement will constrain the flexibility of the developing countries in guiding and channeling

foreign investments in the interests of attaining their development ob*ectives. ;imilarly, it is

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feared that the proposed negotiation on labor standards is meant to effect the enforcement of

these standards through the WT0 dispute settlement mechanism. This will provide a new tool of

protectionism to the developed countries, whereby the exports of developing countries may get

constrained under the pretext of safeguarding labour standards.


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can block a decision even in the last minute, but this is not a practical course of action. Any

developing country will find it difficult to take the blame for blocking a consensus at the final

formal meeting to approve a decision. The developing countries have lately been voicing their

concern loudly and clearly about the lack of transparency and lack of participation in the

decision2making process.

)e1t *e2 3ears

There will be a hard struggle ahead for the developing countries in the next few years. Intense

pressures will be put on them to accept the launch of a new round of WT0 negotiations that

encompasses the new sub*ects. In the process, some assurances may be given that their

development interests will be kept in view. There may also be promises dangled of special and

differential treatment of the developing countries. ;ome safeguards may be suggested in terms of

holding out the possibility that a developing country need not *oin a new agreement if it so

decides, i.e. something like the route of Hplurilateral agreements. >ore concrete steps may be

taken by the developed countries in respect of the least developed countries, by allowing the

latter some improved market access up front. All these inducements will be designed to blunt the

sharp opposition of the developing countries to the launching of a new round and the inclusion of

new sub*ects in it.

0nce the negotiations get underway, however, the past picture may emerge again. The new

sub*ects, who are of great interest to the ma*or developed countries, may receive full attention,

while the sub*ects of interest to the developing countries may get relegated to the background.

=inally the developing countries may end up making further concessions

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$/ that add to their already heavy burden. And perhaps they will be doing all this for no real gain

in return in terms of better market access abroad or better protection for their domestic

production.

The developing countries have to keep in mind the recent experiences of the ruguay -ound,

discussed briefly above. They should know that promises, assurances and expressions of benign

intentions, principles and ob*ectives do not count for much in the WT0 setup. It is only the

concrete and enforceable obligations of individual countries that have real value in this

organisation. Also, they should recall that the developed countries never make a concession

without getting at least a commensurate reciprocal concession in return. The developing

countries response to the pressures of the developed countries should be guided by these factors.

=irst and foremost, they should not allow those sub*ects that are not within the current

GATTKWT0 framework, e.g., investment and labour standards, to be included in negotiations. If

they have to yield on this matter 4as happened in the ruguay -ound in respect of services and

I!-s5, they must ask for consideration for the mere entry into the negotiating agenda of the

sub*ect, and make sure they receive it before the sub*ect is included. The price could be in the

form of concrete and enforceable concessions from the sub*ects demanders which could be of

immediate and also long2term utility to the developing countries. Also, they should ensure

inclusion of the points of their interest in the agenda of negotiations in these areas if negotiations

are to be undertaken.

In the areas which are within the framework of GATTKWT0, they should put all the matters of

their interest on the negotiating table. They should continue to insist on consideration of the

Himplementation issues on a priority basis. In fact, they could insist on agreements on some of

the important issues before agreeing to the initiation of negotiations in the new areas, even new

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areas which are within the current GATTKWT0 framework. The other Himplementation issues

should be accorded unambiguous priority in the negotiating programme. The developing

countries have to realiEe that they can achieve their ob*ectives in the WT0 only if they work

together. There is a great need for consolidation of their positions and mutual cooperation and

support in the preparation process.

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