No shortage of words at the WTO

Date: 05/12/1996

NEXT week in Singapore, 123 foreign trade ministers will gather for the first time since they met in Marrakesh in April 1994 to sign the Uruguay Round world trade agreement.

Preparations for Singapore began almost the next day and will go on until the small hours of the morning of 9 December, when the first ministerial meeting of the World Trade Organisation begins.

“The draft declaration is changing every half an hour,” said a WTO official in Geneva. “During the last three weeks it has been continually changed to accommodate differing views.”

As the meeting approaches, conflicting policy announcements from all quarters seem to be multiplying rather than diminishing - and the gaps between developed and developing nations, east and west, seem to be widening rather than narrowing.

A US official insists that this is to be expected, and is indeed part of the game.

“To say we have differences in position three weeks before we conclude the agreement is not news,” he argues.

But Charles Carlisle, who was deputy director-general of the General Agree-ment on Tariffs and Trade (GATT) in 1993, wrote recently that the scurrying around suggested the world was “not ready for a leap to global free trade”.

The ministers face half a dozen major questions when they arrive in Singapore.

Unlike most meetings of this stature, where underlings nail down all the details in advance and ministers merely give the agreements their political imprimatur, at least three of the big issues facing WTO members will go to Singapore unresolved.

The ministers themselves will have to fight over whether to make trade contingent on minimum labour standards, open protected textile markets and ease cross-border investment flows.

They are also likely to be left to clean up the mess surrounding a few other issues, notably whether to accelerate planned negotiations on agriculture and services. Even though governments agreed to future negotiations in 1994, their trade experts in Geneva have been unable to draft foolproof paragraphs for them to sign in Singapore.

“Everyone is so nervous about each and every word in the Singapore declaration,” said a Geneva-based official. “They do not want a word to open them up to some unanticipated obligation.”

At the end of their three days in Singapore, however, the ministers will have to sign a declaration and commit their governments, if not to future deals, at least to future negotiations.

If the delegates went to Singapore today, the disharmony would be deafening. Europe, the US and Asia disagree on the three most visible issues: labour standards, the environment and investment.

To make matters worse, officials say their own governments' policies on trade and labour are fluctuating daily. One US official said he could not evaluate the many changes in US policy in the past three weeks because he had not seen the latest incarnation.

The three giant trading blocs also differ in their attitudes to competition policy and a host of individual sector goals.

The ministers who went to Marrakesh agreed they could not wrap up deals on financial services, shipping and telecommunications, and left negotiations in these areas to be completed later.

The talks have not gone well since then. The US pulled out of EU-led negotiations on financial services, and telecoms and maritime talks have missed their 1996 deadlines. Geneva officials hope telecoms and financial services deals can be concluded next year, but maritime talks will not restart again until 2000.

The WTO secretariat has penned a 15-page list of negotiations already scheduled as a result of the Uruguay Round agreement which have not yet got under way.

Agriculture and textiles are due for new negotiations at the end of the decade but, as Carlisle wrote, “the EU, especially France and some of the southern member states, is probably no more ready to accept free trade in agriculture today than it was at the end of the Uruguay Round”.

US officials say Europe has not fulfilled its obligation to lower tariffs on agricultural products, and they have taken their complaint to the WTO. But American farmers are no more likely than their European colleagues to give up their long-established safety nets.

Like agriculture, the textile industry is heavily protected in most countries and no textile producer in Europe, Asia or America is willing to strip away that protection. The US accuses Europe of lagging behind in implementing an agreed phase-out of textile import protection and some developing countries are not dismantling barriers at all.

While many governments wax lyrical about the virtues of competition, they seem unlikely to commit themselves to concrete action. Developing countries fear they would lose out on a deal and Europe, with raging unemployment, is not exactly thrilled about the idea either.

While WTO members are still congratulating themselves for cutting tariffs on manufactured goods in 1994, Australia wants industrial tariffs reduced even more and has asked for a pledge in Singapore to start new negotiations in 2000.

US officials say they hope to resolve their differences with the EU on information technology before Singapore, so that they can then work towards a global deal to eliminate tariffs by the year 2000.

Europeans and Americans are also pushing for standardised customs procedures in order to open up markets.

Some trade-watchers maintain that the quest for open markets runs counter to another WTO drive: to bring some of the world's biggest countries into the organisation.

Thirty applications are pending, including those from China, Russia, Ukraine and Saudi Arabia. The WTO hopes to take in China during 1997, and Russia a year or two later, but accepting those and other nations struggling to change their command economies can only make liberalisation talks more difficult.

In their Singapore declaration, the ministers will say that they look forward to opening the club, but only if the new members will accept current club rules. Existing members do not want to water down hard-fought agreements just to help Beijing and Moscow succeed in their applications.

Despite rumours that ministers might make a surprise announcement in Singapore welcoming China into the fold, WTO officials say no one applicant will be singled out.

Most voices are, in fact, pushing for very little at Singapore. WTO Director-General Renato Ruggiero himself has consistently downplayed expectations for the meeting, saying it will be important in the WTO's working life, but will not do “extraordinary new things”.

US Trade Representative Charlene Barshefsky has repeatedly stressed that the meeting should concentrate on concluding unfinished business and not launch any sweeping new initiatives.

“It is clear that the American people will not support new agreements if current agreements are not enforced,” she warns.

Barshefsky predicts the meeting will not call for a new round of trade talks, or even set targets for complete free trade in the future.

The EU is not calling for a new round, either, but Trade Commissioner Sir Leon Brittan expects that events in the coming few years will militate in favour of one later on.

After the Kennedy, Tokyo and Uruguay rounds, Brittan already has a name ready for the next one: the Millennium Round.

But can anybody handle more talks? The Asians have already promised each other an ASEAN free trade area by 2003, North and South Americans have agreed to create a free trade area of the Americas by 2005, and Asians and Americans in APEC have pledged themselves to achieve free trade by 2010. Meanwhile, in the US, politicians are still pleading exhaustion from NAFTA talks.

If next week's meeting creates more chaos than order, it will not be the first time. None of the previous trading agreements were reached without a fight. The Uruguay Round almost collapsed over EU-US disagreements on agriculture.

But can any declaration that 123 ministers agree on have any substance at all? On the last day of pre-meeting consultations in Geneva last week, a weary WTO official was still hopeful.

“During the Uruguay Round, somehow 125 ministers managed to agree on 27,000 pages of text,” he said. “It took them seven and a half years, but it did show that anything is possible.”