From Marrakesh to Seattle … and what’s ahead (1)

A further eight months were needed, until 1 January 1995, for national legislatures to ratify the agreements and allow the World Trade Organization to enter into force.

But Marrakesh was already the starting signal for breathing life into the WTO agreements, and launching follow-up work on unfinished business of the Uruguay Round.

That work has continued without pause ever since, mostly among trade negotiators in Geneva, backed up by their governments at home, but also in meetings of the WTO’s guiding Ministerial Conference.

The first Ministerial Conference took place in Singapore, in December 1996. The second was held in Geneva, in May l998, and was coupled with a separate meeting, attended by many heads of state or government, to celebrate the 50th anniversary of the multilateral trading system.

The Seattle Ministerial Conference from 30 November to 3 December 1999 is the third in this series of top-level meetings of the member governments of the WTO, and perhaps the most important so far.

The central tasks of WTO member governments at the Seattle meeting, as at its two predecessors, are to:

• review what the WTO has been doing
• assess the present situation of world trade and international trade relations, to identify challenges that the multilateral trading system must meet
• agree on the WTO’s work programme for the months and years ahead.

What the WTO has been doing 

… ongoing business

Much of the work the WTO has been doing since the Marrakesh meeting consists of tasks defined in the WTO agreements themselves.

Many of these tasks are never-ending. Each agreement that sets out rules for an area of trade policy — for instance, for aligning customs valuation procedures, restricting subsidies to agriculture, or avoiding unnecessary technical barriers to trade — requires that governments keep one another informed of what they are doing to meet their commitments.

Regular meetings of experts are needed to discuss progress, allow mutual questioning, and clear up misunderstandings or difficulties. These specialized meetings also allow members to develop their ideas on how cooperation might be extended, either to overcome shortcomings in existing agreements or to respond to new developments.

A current example is an across-the-board examination in the WTO over the past year of whether the trade rules need adjustment to cover the explosive growth of electronic commerce, which is doubling every 100 days. Another continuing task is the regular reviews of national trade policies. These are not concerned with whether a country is living up to its WTO obligations, but with allowing members to understand each others’ trade policies, practices and problems and to offer comment.

… the “built-in agenda”

The agreements signed in Marrakesh also called for a very large number of specific tasks to be undertaken, including further negotiations. This is the so-called “built-in agenda”, recognized by all member countries as work to which they are jointly committed.

Some of these tasks were tackled immediately after the Marrakesh meeting. Others, such as reviews of experience with particular agreements (for instance, the new dispute settlement rules, and the agreement on protection of intellectual property) were to take place only after some years: most have now fallen due, or will do so very soon.

Two major commitments for the immediate future, on which the Seattle meeting will certainly focus, require renewed negotiations to reform policies affecting agricultural trade and open up world markets for trade in services.

… negotiations on services following Marrakesh

A top priority after Marrakesh was to carry forward services negotiations that had not been completed during the Uruguay Round. Four separate negotiations were needed: on basic telecommunications, financial services, maritime transport and movement of natural persons.

Agreement on basic telecommunications services was reached in February 1997. It involved 69 governments, accounting for more than 90 per cent of the $600 billion world market for basic telecommunications in 1996. Members made far-reaching commitments to open their markets. Many also accepted a set of regulatory principles, designed to ensure that trade liberalization could not be frustrated by anti-competitive behaviour. Many countries saw commitments in the telecommunications sector as a way of taking maximum advantage of new information technologies, and associated investments, in view of the extraordinary opportunities offered by these technologies as an instrument of development.

The negotiations on financial services, another huge sector essential to the functioning of the world economy, were particularly difficult, but also highly successful. Seventy governments reached agreement in December 1997 on commitments to open their markets for banking, insurance and securities trading. In this negotiation, too, the participants accounted for more than 90 per cent of the world markets concerned.

The negotiations on maritime transportation services did not succeed: participants suspended them in 1996, agreeing that, with no satisfactory liberalization package yet in sight, they would do better to return to the subject as part of the broader services negotiations that will start in 2000.

The negotiations on movement of natural persons, a matter of particular interest to developing countries, were completed more quickly, in mid-1995, with modest results.

The built-in agenda also requires negotiations to fill in gaps in the General Agreement on Trade in Services, which still lacks agreed rules for subsidies, safeguard action and government procurement.

… and tariffs

Another post-Uruguay Round market-opening achievement was the Information Technology Agreement (ITA), reached in March 1997 after an extra boost given to negotiations by the Singapore Ministerial Conference of December 1996.

Forty-three countries, responsible for 93 per cent of trade in information technology products, committed themselves to remove all tariffs, by the year 2000, on computers, telephones and many other telecom products, semiconductors, software and scientific instruments. Trade in information technology products accounts for some 12 per cent of total world trade — more than the share taken by agricultural products.

“ITA2” negotiations continue, with the aim of eliminating tariffs on still more information technology products.

Also at the Singapore meeting, countries which had agreed in the Uruguay Round to remove tariffs on imports of a large number of pharmaceutical products added another 400 products to their duty-free lists.

talks on new subjects …

The Singapore meeting added new tasks to the WTO’s workload. Working groups were set up to examine the relationship between trade and investment, and to study the interaction between trade and competition policy. In both cases, investment and competition policy, the subjects were controversial, and ministers agreed that the work must not prejudge whether negotiations would take place, and that any decision to launch negotiations would require consensus agreement.

Another group was also established to study transparency in government procurement practices (and to consider what might go into an agreement on the subject), and the WTO’s Goods Council was directed to see if new rules might help efforts to ease and simplify trade procedures. All four subjects are likely to be discussed in Seattle.

Two further important items on the WTO’s built-in agenda are work on trade problems of the least-developed countries and study of the relationship between the trading system and environmental issues:

trade problems of the poorest countries …

Apart from provisions in individual WTO agreements that take special account of least-developed countries, the Marrakesh package included a decision not to require these countries to undertake commitments or concessions inconsistent with their development, financial and trade needs, or with their administrative and institutional capacities.

The decision set up a process of regular reviews, and called for “flexible and supportive” application to them of the WTO agreements, as well as technical assistance.

At the Singapore meeting, ministers agreed on a plan of action to help least-developed countries respond to opportunities offered by the trading system. This led to a high-level meeting called by the WTO in October 1997 aimed at countering the marginalization of the least-developed countries.

One result was that 19 developed and developing countries announced measures giving some products of least-developed countries new or improved preferential access to their markets. Another was the launching of an integrated programme for technical assistance to these countries.

The programme identifies specific trade-related needs of each country, and brings together the WTO and five other agencies (IMF, ITC, UNCTAD, UNDP and World Bank) to coordinate their own responses and help enlist further aid from bilateral donors.

trade and the environment …

Environmental issues had already been under study in the GATT before the end of the Uruguay Round.

At Marrakesh, ministers decided that the WTO must pursue this work, agreeing that there need be no contradiction between an open, non-discriminatory and equitable multilateral trading system on the one hand and acting to safeguard the environment and sustainable development on the other. Ministers also underlined that the WTO should not stray into areas beyond its competence.

The WTO’s Committee on Trade and Environment has met regularly since then, exploring the relationships between WTO rules and multilateral environmental agreements, environmental taxes and standards, and labelling and packaging requirements, as well as the effects of environmental measures on exports of developing countries, and environmental advantages of removing trade restrictions and distortions.

The WTO has also held various symposia, most recently a two-day symposium earlier this year which brought trade and environment policy makers from member governments, intergovernmental organizations, academia, and non-governmental organizations together to discuss these issues.

Controversy has beenheightened by the attention given to several high-profile disputes related to environmental issues and brought to the WTO by developing countries. For more on this subject, see the next section of this booklet.

Finally, any record of what the WTO has been doing since the Marrakesh meeting must take account of two major and continuing tasks: its efforts to settle trade disputes among members, and nearly 40 separate negotiations on the terms of accession of countries that have applied to join the WTO.

disputes …

For many observers, the WTO’s dispute settlement procedures are its most striking feature.

In the last resort, dispute judgements of the GATT, like those of most other international agreements, could not be enforced if a member government chose to disregard them. In contrast, the WTO dispute rules have teeth. They apply across the whole range of WTO agreements on goods, services and intellectual property protection, and decisions by the WTO Dispute Settlement Body on conclusions of dispute panels or the Appellate Body cannot be blocked by a country which loses its case.

A government found to have failed to meet a WTO obligation can be required to put the matter right and, if it does not, the complainant may be authorized to take retaliatory trade measures.

This happened for the first time in 1999. Dispute settlement is a large and growing part of the WTO’s work. Between January 1995 and August 1999, WTO members invoked the settlement procedures 183 times over 142 distinct matters, through formal requests for consultations (the first stage in handling an official complaint). The GATT dispute procedures were invoked only about 300 times in 48 years.

Many problems are resolved through consultations, without requiring establishment of a formal panel to examine the complaint.

Nevertheless, the most recent twelve-month figures on disputes, to July 1999, show that 39 consultation requests were made, 17 panels were established, and eight final reports by panels or the Appellate Body were adopted, while two panel proceedings were halted because the parties had resolved their dispute.

Retaliation was authorized in two cases in which the losing party failed to bring its disputed practices into line with the rules. The dispute settlement system stands as a commitment by governments to the rule of law and civilised engagement, an example of what could be in other arenas of conflict and potential conflict.

… and new members

Since 1995, almost 40 governments have provided solid evidence of the attractions of membership in the multilateral trading system, by applying to accede to the WTO.

At the present time, following accessions by countries which have completed negotiations, the waiting list to join still stands at over 30 countries. They range in size from China and the Russian Federation, the two largest trading powers not yet within the system, to small least-developed and island countries. Many are in transition to a market economy.

The accession process is inevitably slow, as it involves alignment of the applicant’s trade policies and legislation with the WTO rules, as well as bilateral negotiations on commitments to open up its markets for goods and services. Technical assistance is often given.

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