India & The WTO Newsletter

Seattle Ministerial : An Outline

The 3rd Ministerial Conference held in Seattle, USA from 30th Nov-3rd Dec. 1999, ended without any declaration. Mass demonstrations and protests marred the atmosphere.

India had gone to Seattle with a constructive brief based on the near national consensus evolved in consultation with the National Trade Advisory Committee, national level political parties and trade unions and other stake holders. The fact that there was a near national consensus gave the necessary backing to the Indian delegation to stand firm and protect and project our interests at the Ministerial Conference.

The inaugural session of the Conference could not take place on 30th November, due to widespread agitation and protests by anti-WTO Groups. The plenary session was started in the afternoon under heavy police protection.

The Commerce and Industry Minister (CIM) addressed the plenary in the evening of the first day. In his statement, he highlighted the various implementation issues and concerns arising out of the Uruguay Round Agreements and called for their priority resolution. He stressed that the central theme of any future negotiations should be to focus on all round development, capable of eradicating poverty. On the mandated negotiations on agriculture, he urged that developed countries should eliminate export subsidies and other trade distorting measures, while ensuring that the objectives of food security and rural employment were safeguarded for large rural agrarian economies. He further underlined that trade negotiations should concentrate on core issues of market access ensuring smooth flow of trade based on equity. He also opposed the inclusion of non-trade issues such as labour standards and rejected attempts to widen the environmental window, for legitimising trade restrictive measures.

The broad approaches of the different groups continued to be along the lines adopted by them prior to Seattle. The US maintained its emphasis on a manageable agenda, with agricultural reform, liberalisation in services and industrial goods, trade facilitation, systemic reform in WTO and stronger environment and labour standards as the main ingredients of the package. But its voice had grown more strident on certain issues, with the US Secretary of State for Agriculture demanding that the Ministerial Declaration should be such that we can "aggressively reform agricultural trade by lowering trade barriers, substantially reducing trade-distorting subsidies". The new demand voiced by them was regarding free use of biotechnology products. The US receptivity to developing country issues was limited to their willingness to opening markets more fully to products, especially from the LDCs, and offering significantly expanded technical assistance.

The rallies were used by the EU, too, as a revalidation for "controlled globalisation" i.e. a linkage of globalisation with environmental sustainability and with "environmental considerations integrated throughout the negotiations in the New Round" or "mainstreaming". The EU's insistence for "an inclusive, substantial negotiating agenda" continued to be as marked as in the pre-seattle period, with non-trade concerns punctuating whatever liberalisation they were agreed to in agriculture. Their receptiveness regarding developing countries was shown mainly through their promise about "looking afresh at what we can do by way of capacity building, technical assistance and special and differential treatment".

Japan was prepared to "find ways to ensure participation of developing countries in the new round of negotiations", through inter alia looking at "the so called implementation issues", attaching "particular importance to reviewing the rules on anti-dumping". Predictably it wanted to guard its agriculture against further liberalisation through the plea of the multifunctionality of agriculture.

The Cairns Group sharpened its attack on agricultural protectionism.

Members of the Likeminded Group of developing countries, continue to support India in its proactive agenda of redressing the imbalances in existing agreements, a continuation of the study process on Singapore issues and firm rejection of non-trade issues such as labour standards and opposition to involvement of NGOs in the functioning of WTO (i.e. in the context of dispute settlement).

The Committee of the Whole (in which all member countries were present) took a decision to constitute five parallel Working Groups to specifically address

(a) Agriculture; (b) Implementation issues (c) Non Agricultural market access; (d) Singapore Agenda and other issues-Investment, Competition, Trade facilitation, Transparency in Government Procurement Programme and (e) Systemic issues including transparency and relations with civil society. The Groups held intensive consultations, with many sessions lasting into late hours every day. A group on Trade, Globalisation, Development and Global Issues (primarily to deal with labour standards) was also constituted which appeared to be without any authorisation of the Committee of the Whole.

India and several other countries strongly voiced their opposition in the Group questioning even the legitimacy of the Group. President Clinton's remarks about trade sanctions to enforce labour standards caused dismay among developing countries and raised the pitch on the issue. EU and the US made every effort to evolve an agreed text on the issue. Thailand's Deputy Prime Minister and the next DG, WTO, Dr. Supachai proposed the setting up of a new forum under the UN. At a final meeting on this issue, the Costa Rican Chairperson proposed a draft Ministerial decision to establish a Working forum on trade, globalisation, development and labour issues with participation open to organisations such as WTO, ILO, World Bank and the UNCTAD and to be serviced by WTO. India, along with several other developing countries (Malaysia, Egypt, Kenya, Hongkong, China and Pakistan) blocked this proposal.

Due to wide divergence in position in each of the groups, no agreed text emanated and the Chairperson of the Conference decided to start a "Green Room Process" at 6 a.m. on 3rd December, wherein only about 25 Ministers from key countries, including India, were invited for in-depth consultations. However, due to both procedural and substantial reasons, the Green Room Process failed to deliver. Since, more than 100 Ministers were left out, the bulk of the Membership, especially of African, Latin American and Caribbean countries felt marginalised and expressed their resentment by issuing strong statements of protest. On substantive grounds, the Green Room Process failed to bring about reconciliation of wide differences on several important issues such as agriculture, market access for non-agricultural products, implementation, etc.. Due to lack of consensus, the Chairperson decided to suspend the work of the Conference without any Ministerial declaration. It was announced that the Director General of WTO would hold consultations and make recommendations for the re-convening of the Ministerial meeting.

The status of discussions on the various issues is given below in brief, although these are not definitive, since, in the WTO decision-making tradition, "Nothing is agreed until everything is agreed".

i) Implementation issues - Consequent on extensive discussions in this regard both at Geneva and Seattle, the Canadian Chairman of the Working Group proposed a few immediate decisions at Seattle and the setting up of some mechanism to examine and make recommendations within one year/the 4th Ministerial session on other implementation issues. Negotiations in respect of anti-dumping and subsidies have also been proposed. Only the US was opposed to negotiations on anti-dumping and subsidies. No consensus, therefore, could be arrived at.

ii) Agriculture - Although mandated negotiations are scheduled to commence on 1.1.2000, the Cairns Group and the US sought a mandate for speedy reduction of subsidies, which was bitterly opposed the EC, Japan, South Korea etc. on the plea of multi-functionality of agriculture. India's concerns on food security were adequately reflected.

iii) Services - There were hardly any differences on the draft text, which takes into account India's position.

iv) Investment and Competition Policy - The EC proposal to launch negotiations immediately was opposed. Most developing countries were in favour of continuation of the work programme in the WTO to prepare for negotiations to be started in the Fourth Ministerial Conference. India, Malaysia, HK China and Pakistan were in favour of open-ended continuation of the study process commenced at Singapore.

v) Industrial tariff negotiations - Many agreed on the launching of negotiations in this area. However, a few countries including India linked any positive response on this issue with progress on implementation issues. Although our concerns were mostly met in the draft text, we had to oppose the move of a developed country to delete reference to "peak tariff".

vi) Transparency in Government Procurement - Most members, including developing countries such as Brazil and South Africa supported the proposal that on the basis of elements identified in the Working Group on this subject, the Seattle Ministerial should endorse initiation of negotiations. The US and EC wanted an Agreement on the subject at Seattle itself, based on their proposals. The Chairman of the Group on Singapore Issues concluded that India was the only member which did not join in the consensus arrived at between most members on this subject. We were prepared to endorse the proposal that the Working Group should continue its work till the next Ministerial Conference.

vii) Trade and Environment - The EU initiative to "mainstream" environment and the US proposal that members have the right to set high environmental standards unaffected by trade rules were opposed by some developing countries, including ours. However, there was a good degree of support for the US - Cairns Group proposal for removal of environmentally damaging subsidies. The TRIPS - CBD convergence for conserving biodiversity and traditional knowledge sought by India and the developing countries were supported by some.

viii) IPR - Proposals for launching work programmes at Seattle included those to make recommendations to the next Ministerial on the scope for protection of traditional knowledge under TRIPS review of Article 71.1 and 27.3 (b). Many countries were willing to complete negotiations on a system for notification and registration of geographical indications for wines/spirits. However, many countries including India wanted it to be linked with higher levels of protection to additional products other than wines and spirits.

ix) Other issues - The Working Group proposed by India on Transfer of Technology was generally supported, though opposed by U.S. The proposal for a Working Group on Bio-Technology, pursued by USA, did not find favour. E-commerce and Trade Facilitation were found to be fairly non-controversial, though India maintained that "Trade Facilitation" should be taken up only after the work of harmonisation of "Rules of Origin" is got completed. Civil Society participation in dispute settlement, as proposed by US-EU was sharply opposed by many developing countries, including India.
 
 

Closing Plenary Session, Seattle

(Remarks of Ambassador Charlene Barshefsky)
December 3, 1999
(as delivered)

Let me begin by offering my sincere thanks to Director-General Moore, to our Working Group Chairs and

Co-Chairs, the WTO Secretariat, and to each of the delegations representing their governments here at this Ministerial, for their very hard and productive work over the past week. I would also like to thank our hosts in the Seattle community for their hospitality and patience during a sometimes very difficult week.

Over the past four days, we engaged in intense discussion and negotiations on one of the core questions facing the world today : the creation of a global trading economy for the next century. The delegates have taken up some of the most profound and important issues and policy decisions imaginable, including issues that previous Rounds could not resolve, and matters that have not come before the trading system in the past. They took up these issues with good will and mutual respect, and made progress on many of them.

However, the issues before us are diverse, complex and often novel. And together with this, we found that the WTO has outgrown the processes appropriate to an earlier time. An increasing and necessary view, generally shared among the members, was that we needed a process which had a greater degree of internal transparency and inclusion to accommodate a larger and more diverse membership.

This is a very difficult combination to manage. It stretched both the substantive and procedural capacity of the Ministerial, and we found as time passed that divergency of opinion remained that would not be overcome rapidly. Our collective judgement, shared by the Director-General, the Working Group Chairs and Co-Chairs, and the membership generally, was that it would be best to take a time out, consult with one another, and find creative means to finish the job.

Therefore, Ministers have agreed to suspend the work of the Ministerial. During this time, the Director-General can consult with delegations and discuss creative ways in which we might bridge the remaining areas in which consensus does not yet exist, develop an improved process which is both efficient and fully inclusive, and prepare the way for successful conclusion. The Ministerial will then resume its work.

Again, I wish to thank Director-General Moore, the Seattle community, and all our delegations for their hard work and their participation in these talks. Our work together has been a honor and a privilege for me, and I look forward to its continuation in the weeks and months ahead.
 
 

Monthly Update from PMI*/Geneva
15th October - 15th November 1999

General Council

The main focus of the work in the WTO during this period continued to be the preparatory process for the Third Ministerial Conference. The General Council, in the second week of October, carried out a detailed analysis of the first draft of the Ministerial text which had been issued by the Chairman on his responsibility. Based on the observations made by Members, the Chairman issued a revised version of the draft Ministerial text on 19th October 1999.

While the General Council continued to examine and debate the revised text, the Director General, during this period, also initiated Green Room type consultations on individual sections of the revised text. These Green Room consultations which were limited to the main protagonists in each area, mainly focussed on Agriculture, Implementation, Singapore Issues and other new proposals.

There were detailed and protracted deliberations on the four paragraphs of the Agriculture section. The main differences continued to be between the Cairns group which wanted a clear enunciation of the final objectives of the negotiations based on the integration of the Agriculture sector into GATT, and EC, Japan, Norway and Switzerland, which wanted only the language of Article 20 of the Agreement on Agriculture to be reflected in the text. In addition there were wide divergences on the approach to be followed towards the elimination vis-à-vis reduction of export subsidies, and towards multifunctionality. India continued to press for the strengthening of the paragraph on Special and Differential treatment and continued to interact with delegations in this regard. Though substantial progress was made in the Green Room in this regard, consultations did not result in any consensus text, even though by the time the process in Geneva was coming to a close, the Cairns group and the US had managed to agree on the broad parameters of the text.

As far as Implementational issues were concerned, after preliminary discussions in the Green Room, these were entrusted to a special consultant nominated by the Secretariat for this purpose. The consultant carried out detailed discussions with the various delegations in order to assess the possibility and feasibility of addressing at least some of the Implementational concerns at Seattle, with the remaining issues being delegated to a 'special mechanism'. After detailed deliberations the Secretariat came out with a draft text on Implementation which was then considered in the Green Room. However, no agreement could be reached since the major players did not show the requisite flexibility to accommodate the developing countries' concerns.

Investment occupied the centre-stage as far as the Singapore Issues were concerned. A number of Green Room meetings were held, but could not result in any consensus, mainly because certain delegations led by the EC continued to press for multilateral negotiations on Investment, while a number of developing countries continued to express their concern in this regard. India continued to support the continuation of the educative process stating that this issue is complex and that it required further analysis before any decision on the desirability of multilateral rules could be taken. US continued to be ambivalent on the issue of Investment. On Competition Policy, the US steadfastly opposed any possibility of negotiations being launched, thereby preventing any progress in the matter.

Services was one area where there was no serious disagreement on the Chairman's draft. The only thing that India and other countries pushed for is an explicit mention that due respect for national policy objectives and the level of development must be a guiding factor in these negotiations - something already enshrined in Article XIX of the GATS Agreement. This was accepted in principle.

On a separate track, the DSU Review continued with more or less broad agreement that the sequencing between Article 21 and 22 must be resolved by making clear that a Member must determine multilaterally the issue of compliance or non-compliance, before resorting to suspension of concessions under Article 22. The language to this effect was also broadly agreed upon; but differences continued on the issue of the list of products for retaliation and whether this should remain the same for the entire duration of the suspension of concessions or whether it should be allowed to undergo changes at the will of the retaliating Member.

The European Communities formally made a proposal for a joint standing forum on Trade and Labour Standards to be launched by the WTO and the ILO. The proposal skirted the issue of where the forum would be launched; the EC later on clarified that it could be outside the WTO premises. Predictably, the proposal attracted the ire of a large number of developing countries.

The Chairman of the General Council was apparently keen to issue a second revision of the draft Ministerial text based on the Green Room consultations, for the consideration of the larger Membership. However, because of lack of agreement on most of the critical areas, the Chairman did not issue any revised text but instead on 17.11.99, issued on his own responsibility, a number of working papers on those areas on which there had been some movement in the Green Room. However, it was specified that the status of these working papers was only to aid further efforts at consensus building.

Lausanne Ministerial Conference

As had been decided earlier, Ministers from about 20 countries, including India met in Lausanne on 25-26 October 1999 to review and assess the progress made in the preparatory process in Geneva. The Indian delegation was led by the Hon'ble Commerce and Industry Minister Mr. Murasoli Maran and included the Secretary to the Prime Minister and the Commerce Secretary, in addition to Ambassador (WTO). The Lausanne Ministerial Conference saw a reiteration of country positions and ended with a pragmatic assessment by the Ministers that a lot of work was still required to be done before the Seattle Conference.

Committee on Anti-Dumping Practices

The meeting of the Committee on Anti-Dumping, including that of the Ad-hoc Group on Anti-Dumping was held over the period 25-29 October 1999. These meetings were attended by Additional Secretary, Minister of Commerce, Mrs. R.V. Jha.

Committee on Subsidies and Countervailing Measures

A meeting of the Committee was held on 1 November 1999. The most important issue before the Committee was the consideration of the review and extension of Articles 6.1, 8 and 9 as provided for in Article 31 of the Agreement. This was a contentious issue since most of the developed countries led by the EC wanted an extension of these provisions, while most of the developing countries felt that Article 8 in its present formulation did not include subsidies used by them as non-actionable and therefore took the line that any extension should be linked to the review of the provisions of Article 8. Though this issue was deliberated both in informal meetings convened before the formal meeting, and in the formal meeting itself, no decision could be arrived at. In view of the fact that this issue was also under consideration as part of the proposals submitted under the preparatory process, Members agreed to await the results of the discussion on this issue in the General Council.

Sanitary and phytosanitary Measures

A meeting of the SPS Committee was held on 9-11 November 1999. These meetings included a special meeting on the transparency provisions of the Agreement, i.e. mainly related to the notification obligations and their procedure. This meeting was basically geared towards capital based officers, specially those who had been nominated as the nodal enquiry points. In the formal meeting the Committee considered a number of SPS measures and also discussed developing country issues, based on a paper submitted by Egypt.

Customs Valuation Agreement

At its meeting of the Customs Valuation Committee held on 12 November 1999, the request of Honduras, Malta and Gabon under Paragraph 2 of Annex III of the Agreement on Implementation of Article VII of the GATT 1994 to continue to use officially- established minimum values for the valuation for customs purposes was agreed. Accordingly, Honduras, Malta and Gabon can continue use of minimum values untill 1 January 2003 for specific products. In respect of all three Members, this Decision notes that these Members will apply the Customs Valuation Agreement as from 1 January 2000.

TRIMS Agreement

The five-year transition period in respect of notified TRIMs will be completed for all Members with effect from 1 January 2000. The Council for Trade in Goods at its meeting held on 15 October 1999 also formally commenced its review of the operation of the TRIMS Agreement as set out in Article 9 of that Agreement. In the course of this review, consideration shall be given to whether the Agreement should be complemented with provisions on investment policy and competition policy. Amendments to the Agreement, as appropriate, are required to be proposed to the Ministerial Conference. Substantive discussions on this review will be initiated in the year 2000.

Agreement on Rules of Origin

At its two-week session, which concluded on 16 November 1999, the Committee on Rules of Origin intensified further its consideration of the harmonisation of non-preferential rules of origin, especially in the areas of overall architecture for such rules, product-specific rules in the areas of minerals (Chapters 25-27), chemicals (Chapters 28-40), leather (Chapters 41-43), wood and paper (Chapters 44-49), ceramics and glass (Chapters 68-70), precious stones and metals (Chapter 71), and iron and steel (Chapters 72-73),as well as its consideration of the implications of some major proposals for harmonised rules of origin for other WTO Agreements. India chairs the meeting on product-specific rules of origin for chemicals. At this meeting, there was substantial support for India's proposal for making a recommendation to Ministers to facilitate their consideration of a deadline, of 31 July 2000, for completing this work programme on harmonising rules of origin. A number of Members noted with regret the further delay in completing this work programme, as first scheduled for completion in July 1998, and in particular beyond the last agreed extension untill November 1999. A few Members could not however agree on even suggesting a deadline for the completion of the work programme. It was evident that such Members that have introduced interim arrangements for determining rules of origin, such as the United States, would have little incentive for expediting the completion of the work programme on harmonised rules of origin. The Committee will continue its consideration of outstanding issues during 7-18 February 2000.

Schedule of Meetings at the WTO
Geneva : January 2000*

* Source WTO /Geneva as on December 31, 1999