World Trade    WT/MIN(96)/ST/29

    9 December 1996



    Original: English


Singapore, 9-13 December 1996


Statement by Dr. Muhammad Zubair Khan

Minister of Commerce and Head of Delegation

    Pakistan is happy to participate in this historic first Ministerial Conference of the World Trade Organization. The arrangements made for this Conference are impeccable. We are overwhelmed by the warmth of the hospitality extended to us by the Government and people of Singapore.

    This venue for our Conference has symbolic significance. Singapore has continued to illuminate the "East Asian miracle". It has prospered through commerce and competition. It is a member of ASEAN whose economic dynamism and rapid growth has offered examples and hope for other developing countries.

    The inspiring address of His Excellency, the Prime Minister of Singapore will contribute significantly to the success of this Conference.

    Two years ago, in Marrakesh, we agreed to use the engines of free trade and economic growth to build conditions for peace and prosperity for all. After negotiations spanning almost a decade, a number of trade agreements were concluded pertaining not only to merchandise but also to services and to intellectual property. A dynamic legal framework was created within which the tremendous trade opportunities offered by technological innovation and economic development could be seized to produce fair and equitable benefits for all participating countries. While some negotiations remained unfinished at the time, the scope of the Agreements was immense, with extensive implications for resource allocation, structural adjustment and the flow of goods, services and ideas.

    In response, Member countries have put in place policies which conform to their commitments. My own Government has taken far reaching measures to extend and strengthen liberalization policies initiated earlier for greater integration within the world economy.

    As a result Pakistan has exceeded its commitments under the Agreements in many respects. Whereas policy measures were undertaken quickly, our economy is still adjusting in response to the changes made. Unfortunately, as with most structural reforms, the costs accrue in the short term, while benefits emerge in the medium term. Thus the people who are the ultimate intended beneficiaries of the Agreements are still adjusting to the new environment in some ways. In fact, and I may be candid here, a large segment of people in Pakistan, including some in the business community, are not fully aware of all the implications of these Agreements due to their complex nature. We are making a major effort to create better understanding and support for the Agreements.

    A basic premise of the Uruguay Round Agreements was that the integration of the developing countries in international trade is important not only for their economic development, but also for global trade expansion. They must continue to benefit from the principle of differential and more favourable treatment. Developing countries have made a number of new commitments, both substantive and procedural. The range and complexity of the efforts they are making to comply are significant. These countries should not be unduly burdened. Instead, their efforts should be facilitated through the provision of necessary technical and financial assistance in accordance with the commitments in various agreements and commensurate with the needs of developing countries.

    Notwithstanding the challenge of implementation, Pakistan remains committed to principles of free trade and the multilateral trading system. Our purpose, here in Singapore must be to strengthen the multilateral trading system. We can do so by adhering to four guidelines: first, full and faithful implementation of the Agreements we undertook only two years ago. This, in itself, will be a formidable task; second, resisting the temptations to overload our agenda with issues which are obviously divisive and on which a consensus does not exist at present. We must make haste but cautiously. We should add to the WTO menu only after we have full confidence in the proper and full implementation of existing Agreements. Third, to promote the globalization of the WTO by admitting, as soon as possible, the People's Republic of China, Saudi Arabia, Oman, Jordan, the Russian Federation and other States which have demonstrated their desire to uphold the norms and objectives of the multilateral trading system. And fourth, to encourage the compatibility and convergence of regional trading arrangements with the multilateral trading system.

    A review of implementation in the past two years, as contained in the reports of the Councils and Committees of the WTO submitted to us, reveal both achievements and shortcomings. We particularly appreciate that the WTO Dispute Settlement Body is functioning in a fair and effective manner. However, we must ensure that issues are not brought to the DSB for the realization of objectives which do not fall squarely within the scope and ambit of the WTO. This will entangle the WTO in disputes which will endanger the freedom of the multilateral trading system.

    To engender greater confidence in the success of the multilateral trading system, we must address some implementation problems of special concern to developing countries. For example, anti-dumping and countervailing measures have been used very often by certain countries, strengthening the perception that these measures are being resorted to shield against competition from developing countries. Likewise, arbitrary interpretation of rules of origin and imposition of technical standards threaten the trade-opening measures concluded in Marrakesh.

    Another major area of concern is the manner in which the Agreement on Textiles and Clothing is being implemented. This sector accounts for over 20 per cent of the total exports of developing countries. The ATC was designed to redress the anomalies of almost 50 years during which textiles remained outside application of GATT rules. This Agreement, therefore, has systemic significance for a rules-based, non-discriminatory trading system.

    When this Agreement was concluded there were great expectations attached to it. The most modest estimate of the GATT Secretariat projected an increase in export earnings of 18 per cent for textiles and 69 per cent for clothing, over a 10-year period, as a result of the implementation of this Agreement. The experience of the last two years however has belied these expectations.

    The central feature of the ATC is the integration of restrained items into the GATT system. Integration was expected to be genuine and progressive over 10 years. It is most disappointing that in the first phase, only one restrained item was integrated by one Member. The schedules announced by the major importers for the second and third stages of integration include only a few restrained items, mostly low value-added products. According to current projections, over 80 per cent of the restrained textile items and a large number of high valued-added items will not be integrated until the last and final phase. Surely, this is contrary to the objective and spirit of the Agreement. This Conference must warn against any deviation, at the eleventh hour, from the obligation to integrate textiles and clothing trade fully into the WTO system by the end of the transitional period.

    The concerns of the textiles exporters are heightened by the arbitrary changes made by one Member in its rules of origin relating to import of textiles and clothing products. These changes are disrupting trade flows. A spate of transitional safeguard measures were invoked at the outset by the same Member. As a result, exports worth US$1.7 billion are estimated to have come under new restrictions during this time. Furthermore, administrative measures, taken purportedly to counter circumvention, are being applied in a manner that disrupts legitimate exports from targeted countries. Today, two years after Marrakesh, textiles trade is more restricted instead of being more liberalized.

    Unfortunately, the Textiles Monitoring Body, unlike the WTO's Dispute Settlement Body, continues to function in a manner reminiscent of the MFA era, displaying an extraordinary deference to the positions of the major trading partners and has been unable to arrest the erosion in the objectives of the Textiles Agreement.

    We urge the Ministers gathered here to affirm their collective commitment to fully and faithfully implement the ATC in letter and spirit. We also hope that the importing countries will be called upon to ensure the inclusion of a substantial number of restrained and high value-added items in the second and third stages of the integration programmes. Our decision should also affirm that the transitional safeguard mechanism should be used sparingly as stipulated in the Agreement; that immediate measures should be taken to redress the problems created by new rules of origin; allegations of circumvention should not be used to justify the disruption of legitimate trade; the TMB should ensure transparency and impartiality in its work; the Council for Trade in Goods must regularly oversee the functioning of the TMB; and, finally, the General Council should keep the implementation of the ATC under regular review and make appropriate recommendations to the next Ministerial Conference.

    Our commitment to implement the Uruguay Round Agreements includes preparations for the heavy agenda of negotiations envisaged in the Uruguay Round Agreements. This process outlined in our so-called "built-in agenda" will stretch well into the twenty-first century. It is an ambitious work programme for the WTO.

    It is our considered view that it will prove counter-productive to overload the WTO's agenda with the so-called "new issues", such as investment and competition policy. We recognize that some of our partners are impatient to continue liberalization, lest the tide be reversed. But they must acknowledge that, given the controversy and division over the new issues, given the growing concerns regarding the "social costs" of globalization, given the difficulties of the developing countries in fulfilling even existing commitments, it would be prudent to proceed at a calculated and realistic pace towards the goal of complete liberalization of the world economy.

    Most of us agree that the areas of investment and competition policy require an in-depth educational process. This can be done in the United Nations Conference on Trade and Development. The WTO is a negotiating and rule-making body; the UNCTAD has the expertise, resources and the mandate - given by us, the Trade Ministers, earlier this year in Midrand - to conduct the study on investment. We are disappointed that there has been a departure from the Midrand commitment in UNCTAD's Commission on Investment last month.

    I wish to say a few words about an issue which clearly does not belong within the WTO - the observance of core labour standards. I say so because some of our partners have raised this issue so insistently during the preparations for this Conference.

    Let me say, at the outset, that Pakistan is committed to improving the observance of the so-called core labour standards. We have ratified five of the six relevant ILO Conventions. We have instituted the necessary legislation and we are taking administrative action to implement it. All possible efforts are being made to remove the hidden pockets of violations of the norms stipulated in the ILO Conventions. It must be appreciated that revelations of such violations from time to time are not indicative of any lack of commitment on our part. They are a reflection of the difficulties arising from underdevelopment - from poverty, hunger, illiteracy.

    Our resistance to inject the issue of labour rights into the WTO stems from the fact that there is no proven relationship between trade and observance of core labour standards. A discussion of this issue in the WTO will merely encourage protectionist lobbies in the developed countries to resist the competitive advantage of low-wage countries through self-serving campaigns disguised as concern for the promotion of labour standards in the developing countries. This issue must continue to be discussed at the International Labour Organization which has the mandate, expertise and tripartite structure which can foster a broad agreement on this issue among all concerned.

    For those who wish to contribute to the improvement of labour standards through trade, we would suggest the liberalization of trade on an equitable and universal basis, especially in labour-intensive sectors of interest to developing countries. This would significantly increase employment and improve labour standards. Liberalization in the movement of natural persons can also help to enhance labour standards of workers originating from poorer countries.

    The Uruguay Round Agreements, and the birth of the World Trade Organization, marked a watershed in the world's economic evolution. It is most appropriate therefore that the World Trade Organization should meet at Ministerial level in Singapore to reaffirm the commitments of Marrakesh and to generate fresh momentum for their implementation.

    I am confident that the Singapore Ministerial Conference will respond to the historic challenges and opportunities that it faces. The prospects of prosperity and peace may well depend on our ability to achieve this success through cooperation and consensus.