[asia-apec 304] FOCUS-on-APEC#9 Part 5

[gonzalo]

The WTO Singapore Ministerial Conference: The Beginning of the 
End?

by Aileen Kwa*

Friday 13th, December 1996: The first WTO Ministerial 
Conference in Singapore concluded with loud applause, with 
delegates tapping each other on the back for a job well done. The 
celebratory atmosphere continued that night when delegates 
gathered on Sentosa island which had been closed to the public. 
The concert that was staged in the backdrop of SentosaÕs well-
known musical fountain began in style and grandeur with an item 
entitled ÔThunderÕ, where about 10 separate groups of drummers 
from different continents showed off their distinctive drum 
rhythms and strains. This culminated in the different groups 
playing in unison. The effect was nothing short of spectacular. 

No doubt, everyone caught the message the choreographers had 
intended - the unity and spectacle in all that diversity of cultures. 
However, coupled with the fact that it was Friday the 13th, the 
irony was glaring. How much of traditional culture is likely to 
survive when intensely competitive world trade, dominated by the 
interests of one or two of the largest economies is the order of the 
day?

The process of negotiations and the issues dealt with at the WTO 
Singapore Ministerial Conference (SMC) was indicative of the 
injustice and inequalities that were being institutionalised within 
the trade body. This is the same institution that was originally 
conceived of to regulate world trade in order to ensure greater 
equality between trading partners irrespective of economic 
prowess. It is therefore a member-based organisation which works 
on the principle of consensus as well as a set of rules and a dispute 
settlement system. 

The supposed level playing field, however, is sadly far from what 
happens in reality. This was both at the SMC as well as in the 
day-to-day functioning of the WTO in Geneva. Developing 
countries, especially the LLDCs (lower-income developing 
countries) many of which are from the Carribean, Africa, and the 
Pacific, are totally powerless and voiceless and are unable to 
effectively put forth their views such that the issues they want 
discussed would be tabled and dealt with in any substantial 
manner. At the SMC for instance, the agenda was almost wholly 
US and EU led. This was in large part also because of the 
undemocratic and non-transparent process used in negotiations, as 
well as the cross sectoral bargaining which characterises WTO 
negotiations.

Hence instead of the meeting taking stock of the implementation of 
the Uruguay Round, as was originally conceived, the Information 
Technology Agreement (ITA), telecommunications deal as well as 
new issues such as investment, government procurement, labour 
standards and competition policy high jacked the weekÕs agenda.

How was this possible when all members are theoretically equal 
within the body and four-fifths of its members are developing 
countries? 

The Unheard Voices of the Developing Countries

While the main negotiations at the SMC were taking place, 
presentations at the plenary were being delivered by member 
countries throughout the week. Many developing countries 
delivered speeches which pointedly expressed their hopes, views 
and reservations about the work of the WTO. Indeed, as the week 
wore on, and as it became increasingly clear that the weekÕs agenda 
would be almost solely concerned with US / EU interests, the 
plenary speeches by the developing countries became more and 
more succinct and direct in commenting on their unfulfilled 
expectations of the meeting. These plenary speeches were 
important as it became the only public fora developing countries 
had to put on record how they wanted the obviously northern-led 
WTO to best serve their interests. Some of the points made in 
these speeches are illustrated below. The sharp contrast between 
the interests of these countries as well as what became the agenda 
of the week is striking. 

The Continued Restrictions by Developed Countries on Textiles 
and Clothing

Of particular interest was the fact that many countries wanted 
more substantive discussion on the ATC (Agreement on Textiles 
and Clothing) and the dismantling of restrictions by the developed 
countries in this sector. 

Thailand and India for instance called for further integration of 
textiles into the rules of the WTO. Portugal pointed out that some 
members had not met their commitments in this area and Pakistan 
noted that rather than liberalisation, there was even a trend towards 
further restrictions in this area. Indonesia, too, expressed the 
proliferation of safeguard actions by certain developed countries. 
Honduras expressed concern that the agreement on textiles and 
clothing has not been strictly implemented and said that the Textile 
Monitoring Body should be impartial and transparent. Kenya said 
it saw no immediate benefit accruing to developing countries if the 
textile products they export are integrated only in the final phases 
of the transition period, as indeed seems to be the case thus far.

In their attempts to make their voices heard, the International 
Textiles and Clothing Bureau (ITCB), an association of textile 
exporting countries held a press conference mid-way through the 
week voicing their disappointment at the slow and reluctant 
implementation of the Agreement on Textiles and Clothing (ATC) 
by the US and EU. 

Concern was expressed in four main areas. Firstly, no progress has 
been made in the first two-year phase of the ATC to liberalise 
restricted products despite the promise to ensure integration of up 
to 16% of products. The second phase of the ATC is to commence 
on January 1 1998. It is expected that the EU will liberalise only 
3.6% of imports and the US less than 1.3%. This is far lower than 
the 17 % integration that was agreed upon in the second phase. 
Given the slow progress made, the ITCB noted that full integration 
of textiles into the GATT by the agreed upon target of 2005 may 
not be reached. 

A second concern is the abuse of transitional safeguards by the US. 
The ATC has stipulated that safeguards should be used sparingly. 
However, the first 6 months of the ATC saw the US applying 24 
safeguards to 14 countries. In several cases, these safeguards were 
found to be unwarranted and were later withdrawn. The EU has 
not used transitional safeguards but has imposed restrictions by 
way of anti-dumping actions. 

In mid 1996, the US introduced their own Rules of Origin, that is, 
rules identifying where textiles or garments come from. Under these 
rules, the emphasis is not on where value is added but where 
substantive transformation takes place. Developing countries are 
very concerned as these changes will adversely affect their 
economies. 

The developing countries of the ITCB also called on the Textile 
Monitoring Body (TMB), the quasi-judiciary body which 
implements the ATC, to be more transparent  and to ensure that 
justification is provided when decisions are made.

According to the ITCB, the text on textiles in the Ministerial 
Declaration of the SMC does not adequately cover concerns of the 
developing countries. The text is deliberately vague. It states that 
there should be ÔprogressiveÕ inclusion of restricted textile 
products, hence ignoring the concrete targets set out in the ATC. 

As textiles and clothing represent a substantial portion of the 
economy of many developing countries, the ITCB noted that the 
interests of developing countries remained sidelined despite the 
rhetoric of free trade and liberalisation within the WTO. 

On Continued Restrictions in Agriculture

Argentina spoke up on the lack of progress in the area of 
agricultural liberalisation, stating that the issues had been blocked 
by some who want to subsidise production so that progress to date 
has been extremely unsatisfactory. Brazil too, urged all members to 
comply with their commitments on agriculture. The Philippines 
called for the Committee on Agriculture to devote more attention to 
compliance with domestic support and export subsidy 
commitments. And both the Philippines and Nicaragua expressed 
concern about the application of sanitary measures which is 
impairing market access. Sri Lanka voiced the need for careful 
monitoring of the impact of the agriculture agreement on net food-
importing countries, with Paraguay also calling for immediate 
initiation of preparations for negotiations on agriculture. Honduras 
too expressed concern that the agricultural sector is not fully 
integrated into the multilateral trading system and that sanitary and 
technical restrictions are applied. India also stated that the adverse 
effects of the TRIPs agreement on developing countries should be 
addressed. Turkey also supported the initiation of negotiations 
called for in the TRIPS agreement as early as possible.

Other Issues Raised by the Developing Countries

Some of the other issues developing countries, particularly the 
LLDCs expressed, were concern over the new issues being 
introduced at the Ministerial Conference. Many said that existing 
issues were already too much of a burden to cope with and that 
new issues would not serve their interests. Yet others spoke of the 
exclusion they faced as small economies in the negotiations despite 
supposedly being equal members of the organisation. The lack of 
resources and the critical need for technical assistance, but 
assistance that will serve the interests of the receiving country was 
also expressed. 

Many of the smaller economies, such as the SADC (Southern 
African Development Community), Fiji, Mauritius and the 
Solomon Islands stated that preferential trading arrangements for 
developing countries should be extended beyond the year 2000. 
This would provide the developing countries the breathing space 
needed to adapt their economies to the competitive trading 
environment. 

Kenya made the point that the composition of the WTO 
Secretariat should be more representative of the geographical 
composition of WTO members. 

On the third day of the SMC, Sri Lanka stated that it is imprudent 
to overload the WTO with issues that fall under the mandate of 
other international organisations. Botswana urged the acceleration 
of Uruguay Round commitments to cut tariffs, particularly those 
applied to products of importance to developing countries. 

By the fourth and last day of the plenary speeches, developing 
countries, increasingly put out by the weekÕs proceedings became 
more pointed in their statements: 

Many developing countries stated their reservations about the new 
issues that the developed countries were pushing for. Papua New 
Guinea, for example, commented that it had strong reservations 
regarding a WTO investment agreement as it would push them into 
the vicious spiral of aid dependency. Malawi, too, voiced that 
attempts to harmonise investment policies would impede 
membersÕ ability to achieve national priorities in their development 
strategies. 

Several small economies, such as St Kitts and Nevis also voiced the 
concern that they lacked the institutional capacity and resources to 
undertake the additional commitment a competition policy in the 
WTO would involve. 

As an observer, China pertinently noted that a few major players 
were dominating the multilateral decision-making process and 
exerting pressure on others to introduce issues irrelevant to trade. 
Numerous other countries were recommending that the WTO avoid 
overloading its agenda with matters belonging to other multilateral 
institutions. Mozambique, for example, stated that the LLDCs 
were overwhelmed with implementation of the Marrakesh 
agreement and rather than rushing into new issues, would prefer 
that ÔgradualismÕ is required. Cuba, too, had earlier in the week 
voiced concern that developing countries had not yet managed to 
assimilate the Uruguay Round provisions, and that the minimum 
provisions for assistance have not been adopted.

Dominica issued a strong statement that due to the lack of 
resources, many developing countries were unable to actively 
participate in the Uruguay Round and therefore accepted a text 
negotiated by others. These countries are now grappling with the 
implications of their commitments and tangible benefits have been 
difficult to identify.

St Lucia noted that a number of countries that are small or 
dependent on a single commodity for exports have enormous 
difficulties competing in the global economy and require special 
attention. The Maldives asked what the WTO has to offer if a 
single-product exporter has problems. They stated that if the WTO 
is to remain relevant, it has to create opportunities for the LLDCs.

Dominica also stated that the present dispute settlement system 
was unfavourable in regards to the participation of small and 
institutionally weak members. 

As illustrated above, there are numerous issues which developing 
countries would have liked to see tackled. Instead few of these 
were dealt with at the SMC.

In the end, a hastily put together carrot stick offered to the LLDCs 
was a plan of action the SMC came out with agreeing to help the 
LLDCs improve their capacity to respond to opportunities of the 
trading system and to offer these countries favourable market 
access conditions for LLDCsÕ products. As Sir Leon Brittan, the 
Vice-President of the EU Commission revealing stated in a press 
statement issued on the last day of the SMC, ÔThis was almost a 
forgotten issueÕ. Given the reluctance of the developed countries to 
liberalise in the areas that will most help these countries - textiles 
and agriculture - it remains to be seen how effective this plan of 
action will really be.