The Seattle chaos

By Bhagirath Lal Das

THE WTO Ministerial Meeting at Seattle failed mainly because of three reasons. First, the major developed countries had kept their aims very high. Second, a large number of the developing countries displayed courage and some degree of unity on several issues. And third, the host country, the U.S., was not prepared for an agreement without its own agenda firmly placed in the WTO. All these are inter-related, yet each has a background and a lesson for India.

After achieving significant gains in the Uruguay Round in 1994, the major developed countries, with the joint determination of their Governments and multinational firms, proceed immediately to press for further gains in an aggressive manner. And they succeeded almost all the way in the earlier two Ministerial Meetings, the first in Singapore in December 1996 and the second in Geneva in May 1998.This success whetted their appetite and enhanced their confidence.

In Singapore, though their attempt to start negotiations in the areas of investment, competition policy and Government procurement in the WTO did not succeed, they were able to get working groups established on these subjects. They also brought forth a totally new proposal, i.e., of an agreement on zero duty on information technology goods. The developing countries agreed to it without even examining the implications.

Then in Geneva in May 1998, the U.S. pushed a totally new proposal, an agreement on stand-still in electronic commerce, which simply meant a commitment for zero duty on this mode of trade. The developing countries accommodated this suggestion and agreed on zero duty for 18 months. They gave up their right to impose duty on this growing mode of trade in a spirit of cooperation.

This was probably mistaken for weakness, and the major developed countries continued to insist on introducing new issues in the negotiating mandate of the WTO. The European Union started a big drive for negotiations on investment, competition policy and government procurement. The U.S. was lukewarm on the first two, but was quite supportive of the third. Besides, it wanted to start negotiation on linking trade with labour standards. The tightening of environmental provisions was also very much on their agenda. They pushed all these issues during the preparations for the Seattle Ministerial meeting of December 1999.

The aggressive ambitions of the major developed countries were further topped up by the clear announcement of the U.S. President, Mr. Bill Clinton, at Seattle that there must be an agreement on the provision for trade sanctions for use of child labour in manufacture of exported products. No one likes child labour; but the developing countries see this proposal as a pretext for stopping their exports, rather than as concern for their children. The major developed countries have been expanding their wish list and following it up with aggressive zeal in the WTO. All limits of reasonableness have been crossed in the multilateral economic relationship.

Naturally, the developing countries have been greatly agitated by this. Some important factors have been influencing and motivating them in recent months. One, the gains which were expected to flow from the Uruguay Round did not materialise. Two, the implementation of the Uruguay Round agreements started putting a heavy burden on the developing countries. Three, disillusioned with the situation, industry and trade in the developing countries have become vigilant and have started putting pressure on their Governments to protect their interests and enhance their opportunities. Four, non-governmental organisations (NGOs), the press and intellectuals have become very active on matters related to the WTO. Five, the Governments have become somewhat more transparent in this matter and have started wide consultations.

In India, there has been a remarkable difference recently in the approach and attitude of the Government, compared to the situation during the Uruguay Round or even a year ago. Detailed work has been done both in respect of preparing our own proposals and in responding to the proposals of the major developed countries. Consequently, India made a number of positive proposals in the process of preparation for the Seattle meeting. What is particularly remarkable is that India was able to forge a substantial degree of unity in Geneva among about a dozen of the developing countries against heavy odds. This group maintained an overall united approach, although there might have been nuances of difference in the stand and strategy of some countries. The main cementing force within this group was its insistence on the priority of finding solutions for the existing imbalances and inequities in the WTO agreements. Also there was a fair degree of understanding that no new issues should be taken up in the WTO at this stage.

The unity in this group, and in the wider group of developing countries, was strengthened by the strong opposition to the U.S. proposal for including labour standards in the WTO agenda. Towards the middle of November, the U.S. had placed a paper on labour standards in the preparatory process. But the general impression was that it was more for catering to the domestic labour lobby rather than for vigorously pursuing it immediately. Its strong follow up in Seattle through Mr. Clinton's public statement was a surprise and a shock. The developing countries had been unanimous at Singapore in opposing any linkage of labour standards with trade in the WTO and had expressed objections repeatedly thereafter whenever this issue was raised. Thus the U.S. knew very well that this was one subject on which it could not get an agreement of the developing countries.

Even then the U.S. chose to push this subject at Seattle. It reflects a high degree of arrogance and cynical disregard for the concerns of the overwhelming majority of the WTO membership. Traditionally the host countries have been keen on facilitating the process of reaching agreement in the international conferences. But here the host country was prepared to jeopardise the success of the meeting on one issue which, even though indicated by it as important, had not been championed earlier as the single make or break issue. Perhaps, the domestic political situation was the compelling force. The inescapable conclusion is that the U.S. was prepared to sink the boat altogether, if its own wish was not fully accommodated.

Seattle will be remembered for many things, for example, for the extreme inconvenience caused to the visiting Ministers, high officials, NGOs, presspersons and others, including physical injuries to some of them; for the extraordinary situation in which a large number of Governments openly and formally criticised the arrangements made by the host country; and for the negative approach of the host country on the results of the conference. But it will be remembered most for the successful and combined resistance of the developing countries to the steamrolling approach of the major developed countries.

There are a number of lessons for India in this sad episode. One, there is no possibility of satisfying the major developed countries by making one-sided concessions. Setting one concession invariably leads them to ask for another one quickly. Hence, the only rational approach is to look after our own interest and make concessions only when we get commensurate concessions in return. Two, it is possible to hold our line in the WTO if we table our own proposals and strongly oppose harmful proposals of others. The key factor is that our line should be prudently chosen so that at least about a dozen countries are with us. Third, we need not be hesitant in ending an important conference without results, if our key interests have not been accommodated.

(The writer is a former Secretary to the Government of India and former Permanent Representative of India at the GATT.)

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