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The WTO: What happened in Seattle? What's next in Geneva?

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  • Michael Briguglio
    This document, prepared by Scott Sinclair of the Canadian Centre for Policy Alternatives, is worth reading closely. Although intended for a Canadian audience,
    Message 1 of 1 , Jan 31, 2000
      This document, prepared by Scott Sinclair of the
      Canadian Centre for Policy Alternatives, is worth
      reading closely. Although intended for a Canadian
      audience, it may also be very useful to people in
      developing countries.


      The WTO: What happened in Seattle? What's next in Geneva?
      The WTO: What happened in Seattle? What's next in Geneva?
      The WTO: What happened in Seattle? What's next in Geneva?


      The WTO has begun "to intrude significantly on many
      important domestic policy areas and to override other
      bodies of international law."


      "...making negotiators directly accountable to
      political oversight can alter the dynamics of
      closed-door negotiations."


      The overall process "conformed to US government and
      corporate objectives and laid an acceptable framework
      for the continued realization of their negotiating aims."


      "The US had least to lose from deadlock and it acted
      accordingly."


      "Article 13 of the Agriculture Agreement, which insulates
      certain domestic support and export subsidies from trade
      remedy challenge and WTO dispute settlement, expires at
      the end of 2003."


      "Governments could be obliged ... to demonstrate that
      delivering services through the public sector does not
      stifle foreign competition."



      ISSUE: The WTO: What happened in Seattle? What's next in Geneva?

      DATE: January 17, 2000


      Prepared by:

      Scott Sinclair
      Senior Research Associate
      Canadian Centre for Policy Alternatives
      http://www.policyalternatives.ca/
      tel. 902-652-2598
      fax 902-652-2035
      sinclair@...


      SUMMARY:

      The World Trade Organization (WTO) Third Ministerial meeting ended
      in collapse. Ministers and negotiators were unable to reach
      agreement on a draft declaration that would have set the agenda for
      a new round of negotiations and work program at the WTO.

      As a result of the Seattle impasse, it is now unlikely that a new
      "millenium round" can be launched before the next US president
      takes office in Jan. 2001. While anything is possible, the
      earliest realistic window to give the WTO a new negotiating mandate
      is probably late 2001 when the new US administration could go to
      the Congress to seek renewal of fast-track negotiating authority.
      However, while certainly a setback for the WTO and its supporters,
      Seattle does not mean that the WTO will stop functioning or that
      negotiations to expand and extend its rules will not proceed.

      In addition to ongoing dispute settlement and implementation of
      the 1994 Uruguay Round agreements, the WTO will now revert to the
      very substantial "built-in" negotiating agenda and work program
      already agreed to during the Uruguay Round. There will be strong
      pressure on negotiators to achieve results in the built-in agenda
      to demonstrate that the WTO continues to be a vital international
      organization. At the same time, member governments, negotiators
      and the WTO secretariat will try to forge consensus on reforms to
      WTO decision-making processes and to lay the groundwork for a
      future, even broader round of trade and investment negotiations.


      DISCUSSION:

      What happened?

      The "Battle in Seattle," with its millennial overtones, has
      already captured the imagination of pundits and now symbolizes
      the popular reaction against globalization (which is either to be
      commended or condemned depending on one's perspective). It is
      too early to say for certain whether Seattle is a temporary
      setback for the WTO; a permanent weakening of its influence; or
      an opening to advance progressive reforms in global governance.
      Certainly, Seattle was a serious challenge to the WTO's
      legitimacy and the next several years will be a critical period
      for the organization.

      The failure to reach agreement on a ministerial declaration was
      remarkable considering that, with few exceptions, negotiators
      were trying to agree on an agenda for further negotiations --
      not on new rules or legal texts. There are a variety of reasons
      for this unexpected turn of events.

      The WTO has become a "victim of its own success." The Uruguay
      Round agreements moved well beyond the traditional role of the
      General Agreement on Tariffs and Trade (GATT) to intrude
      significantly on many important domestic policy areas and to
      override other bodies of international law. This has provoked
      a public reaction, evident in the streets of Seattle, that has
      caused many governments to reassess the costs and benefits of
      further expanding WTO rules.

      This increased visibility and greater public scrutiny of the WTO
      has reduced key governments' room to compromise and maneuver,
      particularly around controversial issues such as food safety,
      biotechnology, environmental protection, labour standards, trade
      remedy laws and development issues.

      Developing countries were better prepared, organized and far more
      assertive than in previous GATT negotiations. There is a growing
      conviction that the WTO has not delivered the benefits promised to
      the South during the Uruguay Round.

      European Union (EU) member governments exercised tighter political
      control over European Commission (EC) negotiators, reducing their
      ability to make the concessions demanded of them to reach agreement.
      During the week, the European Council of Ministers overruled EC
      negotiators twice by rejecting proposed compromises on biotechnology
      and the overall agriculture text.

      The United States (US) negotiating position was unusually inflexible
      and United States Trade Representative (USTR) Barshefsky did not
      assume the role expected of a neutral chair. Domestic electoral
      considerations, specifically the Gore candidacy, obviously
      influenced the US administration's negotiating tactics and media
      strategy. The US, while striving for success on its own terms, had
      least to lose from a continuation of the status quo ante.

      The public backlash

      The "Battle of Seattle" took place both inside and outside the
      ministerial conference. In the aftermath of Seattle, spokespersons
      for many member governments have publicly, and in some cases
      vehemently, denied that the demonstrations or increased involvement
      of non-governmental organizations (NGOs) affected the outcome.
      They attribute failure solely to the intractability of the issues
      dividing governments. This ignores that the intractability among
      governments is due, at least in part, to the public resonance of
      concerns visibly expressed by demonstrators and to campaigning by
      a broad, international range of non-governmental organizations
      in the run-up to Seattle.

      The demonstrations, staged every day of the Ministerial and peaking
      at over 50,000 on Tuesday, and intense media attention highlighted
      the WTO's rigid agenda and democratic deficit to Seattle and the
      world. Largely due to the protests and the police overreaction to
      them, "WTO" is for the first time a household term in much of the
      world. Quite tangibly, the non-violent protests delayed the start
      of the sessions by over a day, intensifying pressure on negotiators
      and injecting a sense of watchfulness and public drama absent in
      previous WTO meetings.

      The success of the demonstrations indicates a significant shift in
      public opinion toward the WTO and that the concerns expressed by
      NGOs must be part of any new, viable international trade agenda.
      The Seattle results also show how the context of international
      trade and investment negotiations has changed. Through careful
      preparation, strong arguments, and skilful media strategies, new
      players -- including international and national non-governmental
      organizations and smaller government jurisdictions -- can influence
      events.

      North-south issues

      The protracted and bitter selection process of the WTO's new
      director-general was an early indication of the new assertiveness
      of developing countries. The post remained vacant from April 30
      until the Sept. 1, 1999 while member governments argued over who
      should succeed outgoing Director-General Renato Ruggiero. The
      impasse was resolved only when member governments agreed to an
      unprecedented split term with Michael Moore to serve from Sept. 1,
      1999 to Aug. 31, 2002 and Supachai Panitchpakdi to succeed him
      from Sept. 1, 2002 to August 31, 2005. Thailand's Supachai was
      considered the developing countries' candidate, while Moore was
      viewed as the hand-picked US candidate. This bruising selection
      process delayed preparations for the Seattle Ministerial, hardened
      positions, and created ill will on the part of many developing
      countries toward the United States, other Moore backers, and to
      Moore himself.

      The negotiating agenda coming into Seattle was clearly overloaded.
      Geneva-based negotiators were unable to narrow the unresolved
      issues down to a manageable number prior to the ministerial
      meeting. The biggest reason for the deadlock in Geneva was the
      strong position taken by developing countries on so-called
      "implementation issues," that is, developing country demands for
      greater benefits from existing WTO agreements.

      In the Geneva negotiations preparing for Seattle, key developing
      countries banded together to demand greater market access benefits
      (particularly for textiles) and stronger disciplines on
      anti-dumping rules. Many developing and transition-economy
      countries also demanded that the January 1, 2000 deadlines for
      developing countries to implement the Agreement on Trade-Related
      Intellectual Property Rights (TRIPS), the Agreement on
      Trade-Related Investment Measures (TRIMs) and the Customs Valuation
      Agreement be extended. Some developing countries also argued that
      they should be permitted to continue the use of certain export
      subsidies and subsidies to promote the use of local content which
      are generally prohibited under WTO rules. By pushing these
      controversial items on to the agenda, developing countries
      prevented Geneva-based negotiators from reaching consensus on a
      bracketed text that might have reduced the number of outstanding
      issues confronting ministers in Seattle.

      Many developed countries appeared unprepared for this concerted
      effort on the part of developing countries and uncertain how to
      respond. The EU and Japan were ready to make only small
      concessions on market access, but along with Canada shared
      developing countries' concerns about the application of US
      anti-dumping rules. The US, for its part, opposed accelerated
      market access on textiles and refused to negotiate antidumping
      reforms. The Quad opposed blanket concessions on implementation
      timetables under TRIPs, offering only to review requests for TRIMs,
      and customs valuation extensions on a case-by-case basis, as
      already provided for under those agreements. Even though it was
      totally isolated on anti-dumping, the US remained intransigent on
      implementation issues to the bitter end of the meeting.

      Trade and core labour standards was another contentious north-south
      issue where US tactics angered developing countries. Coming into
      Seattle it was clear that it was going to be very difficult to gain
      developing country agreement to establish a WTO working group on
      trade and labour and that this would likely be impossible without
      significant concessions on implementation issues. During the week,
      Clinton's remarks to a Seattle newspaper linking core labour
      standards to trade sanctions further inflamed developing country
      opposition to the US working group proposal. It is possible that
      Clinton's remarks were calculated to provoke a reaction that would
      enable the US administration (sensing defeat, but unwilling to
      bargain) to argue to its union allies that it had fought hard on
      labour standards but could not overcome developing country
      opposition. If so, the developing country backlash was stronger
      than anticipated and further diminished prospects for overall
      agreement on a ministerial declaration.

      Many developing country governments, especially those representing
      small economies, were very dissatisfied with the negotiating
      process. Ministers and negotiators from many smaller countries
      were deliberately excluded from "green room" and other ad hoc
      groupings convened by the WTO secretariat and the US chair. These
      are where the real negotiations took place. Delegations from much
      of Africa, the Caribbean and some from Latin America were so
      incensed by this treatment that on the final day of the session
      they issued media releases threatening to withhold consensus on
      any ministerial declaration.

      This dissatisfaction and frustration with WTO procedures was shared
      by other more influential members. However, if agreement could
      have been reached among developed countries and some key southern
      governments, it is doubtful that the small economies could have
      succeeded for long in blocking a declaration. Major developing
      countries such as Brazil, South Africa, Egypt and even India, while
      clearly displeased with WTO processes, were not among those
      actually threatening to block consensus on procedural grounds.
      These southern governments' objections to the draft declaration
      were also substantive and if greater flexibility had been shown by
      the US on implementation, by the EU on agricultural export
      subsidies, and by developed countries as a whole on market access
      then a deal might have been reached despite the procedural
      objections of smaller economies representing only a fraction of
      world trade. Nevertheless, because of the procedural and
      organizational debacle in Seattle, the clamour for WTO
      institutional reform is too loud to be ignored and this will now
      be one of the WTO's highest priorities.

      East-west issues

      The failure to reach agreement in Seattle resulted from a
      combination of factors, but the most important was the inability
      of the major trading powers, particularly the EU and the US, to
      bridge their differences. Agriculture and agrifood issues proved
      to be the most contentious and remain the key to unlocking any
      future overall agreement.

      Prior to Seattle the US and the Cairns Group, comprised of
      agricultural exporting countries (including Canada) from the
      developed and the developing world, set themselves on a collision
      course with the European Union. They agreed to jointly insist
      that the EU commit itself in the mandate for negotiations to the
      outright elimination of agricultural export subsidies, strongly
      reject the EU and Japan's position that WTO rules should recognize
      the "multifunctional" character of agriculture, and to assert that
      existing WTO rules (specifically, the Sanitary and Phytosanitary or
      SPS agreement) compelled Europe and Japan to accept imports of
      genetically modified food products.

      The US and Cairns' Group insistence on an advance commitment to
      eliminate agricultural export subsidies precipitated the collapse.
      This was a surprisingly selfish, and ultimately ineffective,
      negotiating tactic. If the EU had acceded to this demand, then the
      WTO negotiations on export subsidies would not be about whether to
      reduce or eliminate export subsidies, but only about timetables for
      their elimination. This hard line proved unacceptable to the
      Europeans. On the afternoon of December 3, the final day of the
      session, the EU delegation announced that, acting on the
      instructions of the European Council of Ministers, it was placing a
      "general reserve" on the agriculture text and was not prepared to
      move further until all other sections of the declaration were close
      to agreement. This was the fatal blow to the already fading hopes
      to reach agreement.

      While it was export subsidies that precipitated the Seattle
      breakdown, in the longer term, the role of "non-trade concerns" and
      food safety issues may prove even more difficult and contentious.
      There are internal fiscal pressures on the EU member governments to
      reduce agricultural export subsidies; these pressures will increase
      as the EU expands its membership to eastern Europe. Moreover, the
      harmful effects of export subsidies and dumping unite all
      developing countries -- net food importers as well as agricultural
      exporters. But the so-called non-trade concerns and food safety
      issues concern entire populations not just the farm sector. A small,
      but powerful, group of countries including Japan, Korea, Switzerland
      and Norway as well as the EU is adamant that WTO agriculture rules
      take account of non-trade concerns. And net-food importing
      developing countries, those seeking greater food security or
      governments concerned about the impact of increased trade on small
      producers will not uncritically align themselves with the Cairns
      Group exporters.

      Perhaps the biggest miscalculation in the position of the
      agricultural exporters is to misjudge the force of European public
      opinion, and increasingly public opinion in their own home
      countries, which is deeply concerned about food safety issues and
      firmly set against the forced introduction of hormone-treated beef,
      genetically modified food, antibiotic-treated livestock and other
      products with associated health or environmental risks. Here
      again, effective campaigning by NGOs and increased public and
      political scrutiny of the WTO left European negotiators with little
      room to maneuver.

      Before the meeting, the Europeans had reserved their position on a
      new WTO working group on biotechnology proposed by Canada and the
      US. In one of the week's most dramatic developments, Pascal Lamy,
      the European trade commissioner, agreed to establish such a group,
      but was swiftly rebuked first by several European environment
      ministers and then by a majority of European trade ministers on the
      European Council of Ministers. European ministers were concerned
      that the establishment of a biotechnology working group in the WTO
      would undermine efforts to negotiate the Biosafety Protocol through
      the United Nations. This reversal had a huge impact on the week's
      negotiations. It illustrates the new supercharged atmosphere of
      WTO negotiations, the effectiveness of NGOs in the struggle for
      public pinion, and how making negotiators directly accountable to
      political oversight can alter the dynamics of closed-door
      negotiations.

      There were other less serious east-west divisions. One difference
      was over the appropriate scope of negotiations with the EU and
      Japan wanting a broad scope and the US arguing for a focused
      negotiation. This division is probably bridgeable -- with the
      exception of anti-dumping, where domestic politics leave the US
      with no room to maneuver -- US opposition to the inclusion of new
      topics, such as investment and procurement is tactical, not
      substantive. Other more substantive differences included Japanese
      and Asian resistance to US-backed proposals for accelerated tariff
      liberalization. Another area where there are significant
      differences in approach between the Europeans and the US is
      environmental protection. Beyond defending its own existing
      regulatory approaches, the US position tends to be driven by export
      and foreign investment interests. The Europeans, due to domestic
      public opinion and EU law, have taken a somewhat more nuanced
      approach that gives more weight to public interest regulation and
      the precautionary principle.

      No strong supporter of the WTO, such as the US, could be pleased
      with the Seattle failure and the longer-term threat it poses to the
      WTO. But of all the major players, the US negotiating objectives
      entering the meeting were closest to the actual results.

      The built-in agenda on agriculture and services will go ahead
      (the US sought only to add industrial goods to the agenda)
      Implementation of TRIPS, TRIMS and customs valuation in developing
      countries must proceed as of Jan. 1, 2000. Other time-limited
      exceptions will expire as scheduled. The main US objective on IPR
      and SPS is to prevent any reopening of the current agreements that
      might result in the weakening of their market-opening capacity. The
      built-in reviews of TRIPS are adequate to accommodate US demands
      for further gains. Even on biotechnology the US goal is not to
      negotiate new restrictions but to clarify the current rules and to
      compel recognition that existing and proposed restrictions on the
      import of GMOs are likely WTO-inconsistent. The US had already
      discounted the possibility of overriding developing country
      opposition to "state-of the-art" agreements on investment and
      government procurement. Instead it wanted to focus its investment
      and procurement objectives on the built-in GATS agenda and an
      incremental code on government procurement that is already under
      negotiation.

      Basically, what this list reflects is how closely the Uruguay Round
      agreements -- especially the new topics concerned with services,
      intellectual property, and standards -- conformed to US government
      and corporate objectives and laid an acceptable framework for the
      continued realization of their negotiating aims.

      The immediate launch of a broad round might also have saddled the
      US administration and presidential hopeful Al Gore with a
      potentially divisive file. The vice-president must rely on
      blue-collar and union support that has already been strained by
      the administration's stand on Chinese accession to the WTO. The
      Seattle results did not hurt the Gore candidacy. Moreover, any
      broad round would be certain to include discussion of anti-dumping
      and trade remedy law reform which is politically a non-starter in a
      Congress which has yet to renew the president's fast-track
      negotiating authority.

      The US adopted a high-handed, take-it-or-leave it approach to the
      negotiations. Participants remarked on the inflexibility of the
      American negotiating position. Pascal Lamy, for example, remarked
      that "the United States hardly appeared willing to make any
      concessions, which is after all a sine qua non for any negotiation."
      There was also strong criticism of Barshefsky for failing to
      differentiate between her roles as neutral chair and as head of the
      US delegation. And the timing and tone of Clinton's mid-meeting
      remarks linking labour standards and sanctions mystified or angered
      many diplomats. This is not to suggest, as some have charged, that
      the US wanted or planned for failure. The US strove for success,
      but strictly on its own terms. In the short term, the US had least
      to lose from deadlock and it acted accordingly.

      Unless the Europeans and Japanese unexpectedly accede to the US
      position, it appears very unlikely that attempts within the next
      few months to resuscitate a new round will succeed. The WTO can
      not afford another major failure. And even if the US
      administration agreed to moderate its views, in the midst of a US
      presidential campaign it could not confidently assure success in
      advance of any special ministerial meeting this year. The
      administration already faces a very contentious congressional vote
      on normalizing trade relations with China. While anything is
      possible, it is highly unlikely that a new "millenium round" can
      be launched until after the next US president takes office in Jan.
      2001. The earliest realistic window for ministers to give the WTO
      a new negotiating mandate is probably late 2001 when the new US
      administration could go to the Congress to seek renewal of
      fast-track negotiating authority. The one new issue that might
      bring ministers together, perhaps informally, before then is
      institutional reform of the WTO (discussed below).


      What's next in Geneva?

      Overview

      Even without a new mandate, the WTO has a very substantial
      negotiating agenda. The "built-in" agenda includes major
      negotiations on agriculture and services that will begin shortly
      in Geneva. Negotiations are already underway on an agreement on
      transparency in government procurement and the mandated services
      agenda calls for further negotiations on government procurement of
      services. While intellectual property is not part of the built-in
      negotiating agenda, phased-in implementation, built-in reviews of
      the agreement, and clauses triggering further negotiations on
      specific matters amount almost to a full-scale negotiation. And
      while, because of the Seattle result, no new negotiating topics
      were agreed to, there is a broad consensus that institutional reform
      and decision-making must now be addressed and Director-General Moore
      was directed to consult with member governments on this matter.

      The big question, yet unanswered, is whether serious negotiations
      can proceed while the issue of a broad agenda remains unresolved.
      There will be strong pressure on the WTO and member governments to
      achieve early results in order to demonstrate its continued
      vitality. Because of the serious disagreements, agriculture
      negotiations are unlikely to move beyond the preparatory stages
      for some time. In services, however, the Quad countries share
      essentially the same view and developing countries have not engaged
      strongly. This is a critical area where results could be achieved
      before the broader agenda issue is resolved. A key variable is
      whether the EU and Japan, who are pressing a broader agenda in part
      to increase their bargaining leverage in the agricultural talks,
      will hold up results in the services talks until other issues are
      included.

      Agriculture

      The Uruguay Round Agriculture Agreement requires new negotiations
      to begin by Jan 1, 2000. These are aimed at the "long-term
      objective of substantial progressive reductions in support and
      protection." The Seattle negotiations were an unsuccessful
      attempt to refine, add to and, for some parties, to predetermine
      the results of these mandated negotiations. Because of the level
      of disagreement and having been rejected by the European council of
      ministers, the Seattle agriculture draft text carries little or no
      weight.

      The negotiations beginning this month in Geneva will proceed on the
      basis of article 20 which reads, Article 20 - Continuation of the
      Reform Process:

      "Recognizing that the long-term objective of substantial
      progressive reductions in support and protection resulting in
      fundamental reform is an ongoing process, Members agree that
      negotiations for continuing the process will be initiated one year
      before the end of the implementation period, taking into account:

      (a) the experience to that date from implementing the reduction
      commitments;
      (b) the effects of the reduction commitments on world trade in
      agriculture;
      (c) non-trade concerns, special and differential treatment to
      developing country Members, and the objective to establish a
      fair and market-oriented agricultural trading system, and the
      other objectives and concerns mentioned in the preamble to
      this Agreement; and
      (d) what further commitments are necessary to achieve the above
      mentioned long-term objectives."

      These negotiations are likely to be organized, as was the UR
      Agreement on agriculture, around the issues of market access,
      domestic support, and export competition. The UR also created for
      the first time an agreement restricting government health
      protection measures that affect trade, the Sanitary and
      Phytosanitary (SPS) Agreement. There are no new negotiations built
      into the SPS agreement but it could be revisited as part of the
      agriculture negotiations.

      These sectoral negotiations are likely to move only slowly.
      However, Article 13 of the Agriculture Agreement, which insulates
      certain domestic support and export subsidies from trade remedy
      challenge and WTO dispute settlement, expires at the end of 2003.
      The threat of litigation after this date constitutes an effective
      deadline for the agriculture negotiations. As noted, agriculture
      was the principal east-west stumbling block in Seattle. After
      Seattle, Charlene Barshefsky described agriculture as the defining
      issue that would determine whether a new round was possible,
      stating "If you can't reach agreement on agriculture text, there's
      no reason to move forward." At this point, agriculture is the key
      to agreement on a new WTO agenda and if a formula can be found that
      satisfies the major players, then other elements of an overall
      agreement could fall into place relatively quickly.

      Services

      Services is the most significant component of the built-in agenda.
      In sharp contrast to the agriculture negotiations, there is a high
      degree of consensus on the desirability of broader and deeper
      liberalization of services though the General Agreement on Trade
      in Services (GATS). This unity is most evident among the Quad
      countries, but even among developing countries there is, as yet, no
      significant opposition to and some support for an expanded services
      agenda.

      The services negotiations are the likeliest candidate to achieve
      early results. The biggest unknown is whether the EU and Japan
      would hold up any new services deals until their demands for a
      broader agenda are met. The EU and Japan favour a comprehensive
      round, in part, to enable them to make gains in other sectors to
      trade off against politically sensitive agricultural concessions.
      Stand-alone services deals would undermine the effectiveness of
      this tactic.

      Services negotiations will proceed on the basis of GATS Article
      XIX. Because it was considered uncontroversial, however, the
      services section from the draft Seattle declaration indicates the
      probable direction of negotiations and may even serve as the basis
      of a formal mandate once negotiations begin in Geneva. The draft
      ministerial declaration states that "no service sector or mode of
      supply shall be excluded a priori" from the negotiations
      (para. 28c). It calls for "horizontal" approaches to the
      negotiations (para. 28b), which would produce rules applying to all
      service sectors and modes of delivery. And it directs an existing
      committee to complete a comprehensive review of nomenclature for
      services (para. 28d), which could result in the reclassification of
      services from an uncovered to a covered sector. All these elements
      of the draft declaration underscore the extraordinary breadth of
      the upcoming services negotiations and the need to examine
      carefully the potential impact of any proposed agreements for
      Canadian society -- including, but not limited to, health,
      education, social services and cultural programs.

      The Seattle services draft also calls for sectoral negotiating
      approaches. Three sectoral services agreements have been signed
      since the end of the Uruguay round: the Information Technology
      Agreement in Dec. 1996, the Basic Telecommunications Agreement in
      Feb. 1997, and the Financial Services Agreement in Dec. 1997.
      These sectoral protocols received almost no media attention, were
      little scrutinized by outsiders, and have been politically
      uncontroversial. This may suggest sectoral agreements as a
      low-profile means to extend the scope of the GATS. Potential
      candidates for sectoral services negotiations include energy
      services, postal and express services, and maritime transportation
      services.

      There are also ongoing negotiations on "domestic regulation" under
      Article VI (4) of the GATS. So far this working group has only
      produced standards for professional regulation in the accountancy
      sector. But frustrated with slow progress on a sector-by-sector
      basis, the group has been transformed into the WTO Working Group on
      Domestic Regulation and given a horizontal mandate to develop rules
      applying to all sectors. These negotiations aim to develop rules
      that would permit challenges to general, non-discriminatory
      regulations. Governments could be obliged to convince a WTO panel
      that public interest regulations are not more trade restrictive
      than necessary or to demonstrate that delivering services through
      the public sector does not stifle foreign competition. This
      reasoning is similar to the dangerous logic underlying the abused
      "minimum standards of treatment" and measures "tantamount to
      expropriation" provisions of NAFTA's investment chapter and the
      failed Multilateral Agreement on Investment.

      Government procurement

      Further negotiations on government procurement in services are part
      of the built-in agenda of the GATS and talks were scheduled to
      begin in 1997. These talks may be initiated as part of the broader,
      mandated negotiations on services. An Agreement on Transparency in
      Government Procurement is already under negotiation. Some of the
      proposed elements of this agreement go beyond transparency to ensure
      market access.

      The current WTO Agreement on Government Procurement, unlike other
      WTO agreements which are part of a "single undertaking," only
      applies to those governments that sign on to it. Most developing
      countries have not done so. Developed countries will try to ensure
      that the results of further procurement negotiations apply
      unconditionally as part of a single undertaking to all WTO members.
      This will be resisted by many developing countries.

      Canada has signed the WTO AGP, but it does not apply to provincial
      or local governments. Any agreement on transparency in government
      procurement, if it applied to subnational governments, would be a
      foot in the door on the way to fuller coverage. This could
      discourage the use of procurement for local economic development,
      discourage "selective purchasing" policies designed to promote human
      rights (through boycotts or preferential purchasing), and impose
      significant administrative costs, particularly on local governments.

      Intellectual property rights

      While intellectual property rights are not formally part of the
      built-in agenda, implementation issues, expiring exceptions,
      mandated reviews, and clauses triggering further negotiations on
      specific matters almost amount to a full negotiating agenda in this
      area. This does not mean that the TRIPS agreement will be reopened
      as some developing countries might hope, but that there will be
      considerable scope for developed countries and their corporate
      lobbies to press for new elements to be added.

      The Uruguay Round agreement gave developing and transition-economy
      countries 5 years to apply TRIPS provisions. This deadline expired
      on Jan 1, 2000. Developing country demands for an extension was
      one of the major sticking points in Seattle, but the package of
      implementation measures proposed in the draft Seattle declaration
      did not include a TRIPS extension. At the December 17, 1999 WTO
      General Council meeting, governments agreed to "adjourn and resume
      the discussion of implementation issues when the Council resumes
      early next year." Member governments also pledged to "exercise
      restraint on the matters under consultation so as not to prejudice
      further fruitful discussion and decisions on these matters, or the
      position of other Members." While the US and other developed
      countries have agreed to delay any dispute settlement proceedings
      until the General Council meets next in early February, developing
      countries, as parties to the Uruguay Round agreements, appear to be
      in a weak bargaining position.

      Article 71 of the TRIPS calls for a country-by-country review in
      2000 of developing country members' implementation of TRIPs and,
      in 2002, a review of the entire TRIPs agreement based on members
      implementation experiences. The TRIPS agreement also requires
      further negotiations on the protection of certain "geographical
      indications" (such as "champagne" or "port"). Prior to Seattle,
      the United States argued that the focus should be on full and
      effective implementation of existing TRIPS obligations, not on
      renegotiation of the TRIPS agreement.

      A 5-year moratorium on so-called "non-violation remedies" has also
      expired. Article 64 of the Agreement on TRIPS provides for a
      non-violation" remedy. Basically this would permit formal
      complaints and WTO dispute settlement where a country felt that
      its rights under the TRIPS had been "nullified or impaired" by a
      government measure that conforms to the letter, but not "the
      spirit," of the TRIPS agreement. Many developing countries fear
      "non-violation" remedies. The US opposed an extension of this
      deadline, which, having expired, can now only be renewed by
      consensus or a formal amendment to the TRIPS agreement.

      Article 27.3 of the TRIPS agreement allows member governments to
      exclude plants and animal other than microbiological products and
      processes from patentable subject matter. TRIPS Article 27.3
      requires that this exclusion be reviewed after Jan. 1, 2000.
      The United States and the global biotechnology industry want to
      eliminate this exclusion. Some developing countries, such as the
      Africa Group, are arguing that "the review process (under 27.3)
      should clarify that plants and animals as well as microorganisms
      and all other living organisms and their parts cannot be patented,
      and that natural processes that produce plants, animals and other
      living organism should also not be patentable." Other developing
      countries' objectives include enhanced IPR protection for
      traditional and indigenous peoples' knowledge and stronger
      recognition for compulsory licensing schemes, for example for
      health protection purposes.

      WTO institutional reform

      Because of the organizational debacle in Seattle, the view that the
      institutional structure and decision-making procedures of the WTO
      are outmoded and must be reformed is widely shared. This is the one
      "new issue" that is now firmly on the WTO agenda as a result of
      Seattle. It is also the one issue that might conceivably bring WTO
      ministers together, perhaps informally, before the next regularly
      scheduled ministerial meeting in two years.

      Currently, the momentum behind the reform concept appears strong.
      Once governments turn their attention to the actual substance of
      those reforms, however, any consensus could soon evaporate.
      Procedural reform could prove as fractious as any of the thorniest
      substantive issues.

      Small economies will seek to ensure that the lip-service currently
      given to the practice of consensus is actually made effective and
      that their participation is meaningful. Newly industrializing
      countries will be seeking an enhanced role that corresponds to
      their growing share of international trade and investment.
      Developed countries will require, in the spirit of realpolitik,
      that their preponderant weight in the trading system be formally
      recognised. Indeed what the US, EU and Japan will want, but are
      unlikely to get, is to streamline the negotiating process by
      formalizing their long-standing de facto hegemony over it.

      The keys to a workable reform package may be whether enough of the
      major developing countries can be brought on-side with the offer
      of an enhanced role in some form of executive committee and whether
      developed countries, who have in practical terms always dominated
      the negotiating process, are willing to cede any formal authority.
      In the case of the US, any reform proposal that even appears to
      diminish the power of the US within the WTO system will get a very
      rough ride in the Congress. Moreover, an amendment to the
      structures of the WTO would require approval by a two-thirds
      majority of member governments, giving small southern countries a
      veto, and therefore end-game leverage, if they can work together
      effectively.

      Prepared by:

      Scott Sinclair
      Senior Research Associate
      Canadian Centre for Policy Alternatives
      http://www.policyalternatives.ca/
      tel. 902-652-2598
      fax 902-652-2035
      sinclair@...
      ..................................................................


      AGP Agreement on Government Procurement

      Cairns Group agricultural exporting countries (including Canada)
      from the developed and the developing world

      EC European Commission

      EU European Union

      GATS General Agreement on Trade in Services

      GATT General Agreement on Tariffs and Trade

      GMO Genetically Modified Organism

      IPR

      NGO non-governmental organization

      SPS Sanitary and Phytosanitary agreement

      TRIPS Agreement on Trade-Related Intellectual Property Rights

      TRIMs Agreement on Trade-Related Investment Measures

      UR Uruguay Round

      USTR United States Trade Representative

      WTO World Trade Organization

      other Customs Valuation Agreement


      I can send the document to you as an attached file in
      Word 7.0 or RTF (rich text formats) as originally
      formatted by the author. bobolsen@...


      .............................................
      Bob Olsen, Toronto bobolsen@...
      .............................................


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