Beyond Seattle

By Muchkund Dubey

THE SEATTLE fiasco has been principally attributed to the lack of transparency in the decision-making process of the WTO, magnified by the arbitrary manner in which the proceedings of the Third Ministerial Conference were conducted by its U.S. Chairperson, Ms. Charlene Barshefsky. This is what emerges from the joint communiques issued at the Conference by the Ministers of the Latin American, Caribbean and OAU countries. They expressed their resentment over the manner in which they were excluded from the Green Room negotiations where decisions are really taken, and refused to join any consensus which might have been arrived at in this fashion.

But this was only the ostensible reason of the failure. For, negotiations in the ultimate analysis have to take place among a relatively small group of countries. The problem of transparency can be solved by regional or interest groups nominating representatives to participate in the Green Room proceedings and these representatives keeping the wider groups constantly informed and receiving mandates from them from time to time. This is how consensus is built in UNCTAD and the U.N. system in general. This was not followed by GATT partly because of its limited membership. But now that the WTO's membership has become nearly universal, it should seriously consider adopting a similar procedure for decision- making.

The real reason for the failure of the Conference was the sheer inability of the Governments represented at Seattle to bridge, during the time available to them, the distances that separated them on major issues under discussion. This came about mainly because of the determination of major developed countries to pack the agenda with an expanding set of non-trade related issues in order to take advantage of the unique enforcement procedure of the WTO under its Dispute Settlement Mechanism. The rubicon was crossed after the incorporation of the TRIPS Agreement into the WTO and now the floodgates have opened. On the issue of a linkage between trade and labour standards, the worst apprehensions of developing countries came true and their determination to resist this idea was re- inforced, when the American President, Mr. Bill Clinton, openly threatened that, if necessary, the U.S. would unilaterally apply trade sanctions to enforce labour standards. This remains by far the most contentious issue, making it difficult to resume the negotiations any sooner in Geneva.

India should play a pro-active role in evolving a global consensus on keeping non-trade related issues outside the WTO agenda. Several eminent economists and leaders of industry in the Western countries are against linkage. Prestigious newspapers and journals of these countries, such as the Financial Times, Wall Street Journal and The Economist have written against it. In pursuing the linkage issue, the Governments of the Western countries, egged on by their trade unions and other vested interests, are acting out of political necessity in callous disregard of economic logic or the interest of the developing countries. One of the primary tasks ahead for India is to build a Third World solidarity on this issue and also to enlist the support of the like-minded economists and media in the Western countries. An attempt should also be made to get the TRIPS Agreement delinked from the WTO, and its character substantially altered by making it compatible with the Bio-Diversity Convention.

For countries such as India, Seattle was neither a triumph nor a source of any great comfort. It has provided only a temporary breathing space during which we must recharge our batteries and better prepare ourselves for the upcoming negotiations. Seattle failed not because of the solidarity of the South against the determination of the North to introduce non-trade related items. The fact was that the prevailing chaos and confusion did not even allow this issue to be joined seriously.

Signals received since Seattle indicate that developing countries will be subjected to further pressure on the linkage issue. In this connection, the Summit-level agreement reached between the E.U. and the United States carries ominous portents. The two sides have agreed to work towards a new round of negotiations with an ``inclusive agenda'', to engage the WTO and the ILO in a constructive dialogue on labour standards, and to ensure that trade rules support and not undermine the ability of Governments to achieve higher levels of environmental protection. Vigorous pro-active initiatives are called for in order to meet the challenge thrown in by this agreement.

In Seattle, most of the issues of interest to India were discussed and on several of them consensus was very nearly reached. These now lie frozen but they cannot be written off altogether. The Draft Ministerial Text which was being negotiated in Seattle would be the basis of further negotiations once they are resumed. From the Draft Text, it appears that an agreement had been reached to launch a new round of trade negotiations. Secondly, it had more or less been agreed that there would be ``a balanced and broad-based agenda to respond to the range of interests and concerns of all members...'' Thirdly, an overwhelming majority of the countries seemed to have agreed that the educational and analytical work on the Singapore Ministerial items i.e. investment, competition policy and transparency in Government procurement, would continue until the Fourth Ministerial meeting when negotiations on these items are likely to be held. Fourthly, there was a near agreement on negotiating reductions in industrial tariffs and extending until the Fourth Ministerial meeting, the commitment not to subject electronic commerce to customs duties. Finally, tentative moves were made towards setting up working groups on subjects such as finance, debt, technology transfer, and bio-technology.

We should strongly resist proposals for setting up working groups in areas which are outside the WTO's jurisdiction. We are unlikely to get anything out of the WTO in the realms of finance, debt, technology transfer etc. We will be told that we should knock at the doors of the IMF, the World Bank and transnational corporations for this purpose. But in the process, we will be a party to further weakening the U.N. on the economic side, particularly UNCTAD. It was, therefore, a mistake on the part of India to have proposed the establishment of a working group on technology transfer. The very fact that we have made such a suggestion would pave the way for setting up working groups such as that on bio-technology to which we are opposed.

The Indian delegation had basically a negative brief on the linkage issue, i.e. to stop progress on it. Its main positive brief was on the implementation issues. During the preparatory stage, India was able to demonstrate that serious imbalances and inequities had surfaced during the process of the implementation of the Uruguay round agreements. India put forward a number of suggestions designed to amend these agreements. The cumulative effect of these amendments is to bring about a change in the post-Uruguay round paradigm for governing international trade. Developed countries are unlikely to agree to this.

In Seattle, some progress in this direction was made. The problem was recognised and assurances were given to tackle it on a best endeavour basis. However, the major developed countries did not allow any meaningful consensus to emerge and insisted that they would not acquiese to any basic change in the existing agreements. They would make concessions, if any, only during the coming negotiations, in which the developing countries will have a very weak bargaining position.

In spite of these limitations, India will have to persevere with its efforts to get the Uruguay round agreements substantially modified. This should remain a major plank of India's future negotiating stance.

(The writer is a former Foreign Secretary.)

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