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Report of World Trade Organization
(WTO) Ministerial Conference
in Seattle, WA
November 30 to December 4, 1999
Details on Principal Issue Areas — POST-
SEATTLE
Agriculture
- The 1994 WTO Agreement on Agriculture
stipulates that negotiations to achieve further "substantial
progressive reductions in support and protection" of agricultural trade
must be launched by the end of 1999. These negotiations are intended to
address reductions in tariff levels, export subsidies and domestic support
programs. The EU and U.S. agricultural systems are particular targets for
these reductions.
- There is strong disagreement between the EU
and Japan on the one hand, and the Cairns Group of agriculture exporting
countries (Argentina, Australia, Brazil, Canada, Chile, Colombia, Fiji,
Indonesia, Malaysia, New Zealand, Paraguay, Philippines, South Africa,
Thailand and Uruguay) and the Association of Southeast Asian Nations (ASEAN)
on the other. The EU and Japan are demanding the inclusion in any agreement
of the concept of "multifunctionality of agriculture", i.e. the
role agriculture plays in rural development, the environment and food
security. The U.S., Cairns countries and ASEAN members argue that the EU and
Japan are using multifunctionality as a shield to protect their agricultural
support programs, that no agricultural products should be excluded from the
negotiations and that the sector should be approached in the same manner as
industrial goods. The U.S. is targeting structures like marketing boards and
state trading enterprises including the Canadian Wheat Board, saying that
they hide subsidies and fix prices. Developing countries are insisting on
greater access to northern markets for their agricultural products.
- The Canadian government’s objective is to
eliminate export subsidies and reduce domestic supports for agriculture. It
will attempt to achieve improvements in market access for our agricultural
and agri-food products, while maintaining our marketing board systems.
- The Seattle talks on agriculture broke down
and were one of the principal reasons for the failure to agree on an overall
ministerial declaration. The European Commission rejected proposed language
on the elimination of export subsidies. It also wanted more progress on
other issues (esp. investment and market access) before agreeing to a text
on agriculture. Though the text contained references to "non-trade
concerns", Japan is reported to be unhappy with abandoning wording on
"multifunctionality".
- Negotiations on agriculture are to begin as
soon as January 2000. There is no deadline for this negotiation. (The
December 3 draft ministerial declaration proposed December 15, 2002 as a
deadline, with offers to be submitted by countries by January 31, 2002). In
the request-offer style of negotiation, countries first put forward requests
for further liberalization of markets; this is followed by a phase where
countries respond to the requests with offers for opening their markets to
the goods and services of others.
Services
- The existing General Agreement on Trade in
Services (GATS) calls for new services negotiations toward "a
progressively higher level of liberalization" by January 2000.
Countries will be under pressure to make commitments to liberalize in new
service sectors and to remove restrictions on those they have already
listed. Negotiations will take place on the architecture of the agreement
(i.e. what mix of "bottom-up," "top-down," or
"horizontal" approaches should be used), on the rights of
governments to regulate in areas they have agreed to cover by GATS, on
criteria for the qualification of service providers, on the nomenclature of
services, safeguards, government procurement of services and subsidies to
service sectors.
- The U.S., EU and Japan are pressing for the
request-offer (bottom-up) approach to be supplemented by alternative
negotiating approaches, including "horizontal approaches" (which
would apply automatically to all sectors and modes of delivery). Japan and
EU are cool to a sectoral approach, preferring global negotiations, whereas
the U.S. appears to want to focus on certain priority sectors.
- The U.S. Coalition on Services Industries and
U.S. Trade Representative Charlene Barshefsky have stated that gaining
greater access to other countries’ service sectors, including health,
education and environmental services, is one of the U.S.’s priorities. The
U.S. wants expanded country participation in GATS, rules to cover the
development of new technologies and increased participation from countries
in the Basic Telecommunications and Financial Services Agreements.
- Developing countries want the right to open
fewer service sectors and to open them more slowly than developed countries.
They want developed countries to fulfill previous commitments to facilitate
the movement of natural persons (i.e. immigration rules) in supplying
services. They also want more access to technology to develop their
services, and to technical assistance.
- The Canadian government objective in services
is to "continue to liberalize trade in services, while respecting
national policy objectives and the level of development of individual
members". Trade Minister Pettigrew is giving public assurances that
"we do not intend to renounce our right to regulate in the sectors of
health and education and the environment", but he has said that opening
markets for Canadian health and education services (e.g. telemedicine and
distance education) is a Canadian priority.
- Despite the above-mentioned differences
amongst countries on services, in Seattle services was the least
controversial area of discussion. Negotiations on services are to begin as
soon as January 2000, based on the existing Uruguay Round GATS text. The
December 2 draft text on services produced in Seattle calls for
countries to submit their requests or proposals on specific commitments by
November 1, 2000 and initial offers by November 1, 2001. No service sector
or mode of supply is to be excluded a priori. There is no deadline
for the completion of this negotiation.
Government Procurement
- Discussion in Seattle on this topic concerned
the development of an Agreement on Transparency in Government Procurement of
goods and services. Such an agreement would establish procedures for
immediate and clear international notification by governments of their
procurement rules and tendering of contracts, and for adherence to due
process. It could also include provisions to allow future negotiations
regarding increased access to procurement markets.
- It should be noted that the scheduled
negotiations on services (GATS) already include a provision for negotiation
on procurement of government services.
- Canada is part of a like-minded group of
countries (with the U.S., EU, Japan, Australia and others) which support an
agreement on transparency. The EU proposes that such an agreement apply to
all levels of government. Japan, India and other developing countries want
it to apply only to national governments. Canada has not pronounced on this.
Developing countries are resisting an agreement on transparency unless
industrialized countries are willing to offer concessions in other areas.
They want to study the issue further by prolonging the mandate of the WTO
Working Group on Transparency in Government Procurement.
- The issue of dispute settlement procedures is
controversial. The U.S. wants enforcement handled by an international body
like the WTO while others prefer recourse to domestic legal systems. Japan
and the EU want to use WTO systems only after domestic procedures have been
exhausted.
- The draft ministerial text calls for
negotiation of an agreement on transparency in procurement, to be adopted by
the next ministerial in two years. The status of this text, however, is
still in doubt.
Accelerated Tariff Liberalization ATL
- The was a U.S.-sponsored initiative to achieve
an "early harvest" of tariff reductions in eight sectors,
including forestry, fisheries, environmental goods and services, energy and
medical and scientific equipment. It was not agreed by ministers in Seattle.
- The EU and Japan opposed the idea of an early
harvest. They want discussion on all industrial tariffs on the table at the
same time, linked to all the other items up for negotiation.
Environmentalists opposed rapid elimination of tariffs for forest products.
In their view it would lead to rapid deforestation.
- It is unclear whether, coming out of Seattle,
this issue is alive or dead.
- The draft ministerial text proposes market
access negotiations of all non-agricultural products without any a priori
exclusions.
Anti-dumping and Subsidies
- On anti-dumping, the key issue was whether to
initiate a negotiation to amend the rules in order to put further restraints
on the use of anti-dumping duties. Of major concern is the permitted
practice of imposing duties when the dumping is caused by weak market
conditions which necessarily results in below cost pricing. Most nations
including Canada supported launching negotiations on these issues but the
U.S. was opposed. Ultimately, the U.S. was alone in its opposition and
blocked the move to put these issues into the negotiating agenda. As
anti-dumping is not part of the "built-in" agenda, it is likely
that this issue will remain stalled.
- In the subsidy/countervailing duty area, the
immediate issue confronting the WTO was whether key sections (Art. 6.1, 8
& 9) of the Subsidies & Countervailing Measures (SCM) agreement,
which expired at the end 1999, would be extended. These provisions, part of
the built-in agenda, describe two types of subsidies. Article 6.1 recognizes
that certain subsidies may cause "serious prejudice" to the
interests of other parties, who may then take action to seek their removal.
By contrast, Articles 8 and 9 establish exemptions for certain subsidies,
such as those for the environment, research and development and for
disadvantaged regions, ensuring that these subsidies are permitted and may
not be countervailed. Generally, the developed countries (including Canada)
liked these provisions and supported their renewal, but developing countries
were neutral or negative on extending them and were looking for concessions
in other areas as the price of their assent. Canada also wanted to include
the SCM in the broader agenda as a way at getting at other areas needing
refinement. Ultimately, the failure to put anti-dumping reform on the agenda
spilled over into the subsidy negotiations which then floundered. In the
near term it is anticipated that efforts will be committed to extending
these sections of the SCM. The draft ministerial text proposes an extension
for two years, until the next ministerial.
Competition Policy
- Again, the Ministerial was to decide if
competition policy should be added to the WTO negotiating agenda for the
up-coming round.
- The EU, Japan and Canada, to varying degrees
support the investigation of linkages between competition policy and trade.
In particular they want to ensure that countries develop domestic
competition policy laws, that there be co-operation/co-ordination amongst
countries, and transparency and information exchange regarding competition
policy laws and experience. The U.S. expressed serious concerns about the
inclusion of competition policy on the WTO negotiating agenda, as it
believes that this could lead to competition policy rules being
"pushed" as a replacement for countervail and dumping actions.
- The draft ministerial text indicates support
for the continuation of educational and analytical work on the linkages
between competition policy rules and trade and suggests that the next
ministerial meeting should decide if negotiations on this topic are
warranted.
Investment
- The Seattle Ministerial was to decide if
investment was to be included in the new negotiating round, and in what
form.
- The EU and Japan wanted an investment
agreement as part of a comprehensive negotiating round. The U.S. wanted
"horizontal" integration of investment into several of the WTO
agreements. Developing countries like India, Egypt, Pakistan and Bangladesh
want no negotiations on investment.
- Though during the MAI debate Canada supported
an investment agreement within the WTO, it is now less clear in its public
statements. Canada has not stated its support for a WTO investment agreement
but does seek protection for Canadian investors abroad, while retaining
"the right to regulate in the public interest"..
- In Seattle, the chair of the WTO group on new
issues proposed that negotiation on investment be considered at the next
ministerial in two years and that an expanded working group on trade and
investment prepare the ground for those negotiations. Among other things,
the working group’s continuing analytical work, according to the chair’s
proposal, would be based on consideration of a "bottom-up"
approach and dispute settlement provisions that exclude an investor-state
mechanism. The EU, Japan, Costa Rica and Switzerland pressed for launching
of negotiations on investment earlier than the next ministerial, at
mid-point in the new round. India, Pakistan and Bangladesh continue to
oppose any negotiation. Next steps on this issue are unclear.
- It should be noted that scheduled negotiations
on services (GATS) include a component on investment.
- The Working Group on Implementation agreed to
instruct the WTO’s Council for Trade in Goods to consider an extension to
the transition period during which developing countries must eliminate trade
related investment measures (TRIMS Article 5.2), but the lack of an agreed
ministerial declaration precludes action on this measure.
Intellectual Property Rights
- Controversy surrounded negotiations in the
area of trade-related aspects of intellectual property rights (TRIPS) both
before and during the Seattle Ministerial. Reasons for this controversy
include: the increasing importance of technology to maintaining competitive
advantages in world trade; the existing disparity in the capacity of WTO
members to create and commercialize new technologies; and the view held by a
number of members that the present focus of intellectual property rights on
new technologies substantially undervalues existing stocks of knowledge and
information. Patenting of life forms is especially contentious, as is the
possibility of re-opening the TRIPS agreement to add coverage of
biotechnology issues.
- Developed countries are generally against
opening TRIPS to new negotiations, recommending that WTO members focus on
the implementation of existing commitments and guard against backsliding
from the existing rules. In particular, the U.S. wants effective
implementation and enforcement of TRIPS among developing countries. They
believe changes to the agreement could be proposed after the upcoming
mandated TRIPS review.
- A number of developing members urged the
Seattle Ministerial to initiate negotiations that take into account their
specific interests, toward a rebalancing of the Agreement. Many developing
countries want an extension of the transition period for their
implementation of TRIPS commitments for an extra two years beyond the
January 1, 2000 deadline set out in TRIPS. Some express concerns
about the incompatibility of TRIPS with other international agreements,
including the Biological Diversity Convention being negotiated under the
auspices of the United Nations. Some object to the patenting of life forms,
"biopiracy" of their genetic patrimony and non-recognition of
their "indigenous knowledge".
- Canada’s goals in the TRIPs area were to:
extend the moratorium on application of an article that could impose
penalties if a government’s action does not violate a TRIPS provision but
has the effect of doing so (this is called the "nullification and
impairment" clause; the moratorium ended Dec. 31, 1999); ensure full
and timely TRIPS implementation; and to participate in ongoing work at the
WTO and the World Intellectual Property Organization (WIPO) aimed at
improving the international intellectual property framework.
- The Council for TRIPs is to review the
implementation of the Agreement at least every two years and may modify or
amend the agreement in light of new developments. Furthermore, three areas
in TRIPS will receive more consideration by the Council, including:
geographical indications of origin, termination or continuation of the
moratorium on nullification and impairment, and rules applicable to the
protection of plant varieties.
- The TRIPS Council is currently reviewing
Article 27.3b of the agreement, which concerns plant variety inventions.
This provision allows members to exempt from patentability plants and
animals (other than micro-organisms) and essentially biological processes
for the production of plants and animals. However, the provision requires
members to provide protection for plant varieties either through patents or
unique legislation. The debate on patentability of life forms is far from
over.
Labour and Human Rights
- The issue of whether labour and human rights
have a place in WTO agreements became very contentious at the Seattle
meeting. The United States attempted to place environment and labour/human
rights on the WTO agenda. President Clinton made several powerful speeches
supporting the protesters (particularly organized labour) and insisting that
the issues raised by the protesters have to be addressed in order to give
the WTO legitimacy. He mentioned the possibility of using trade sanctions to
enforce labour provisions. It is likely that the U.S. position on these
matters arose out of a concern for domestic politics. In the
Administration’s view a failed deal was better than one that would have
alienated their core constituency. The U.S. position was soundly rejected by
less developed nations as protectionist and a majority of WTO members
rejected the creation of a working group. EU Commissioner Lamy stressed that
the EU did not believe, unlike the U.S., that trade sanctions were an
appropriate means of promoting respect for core labour standards. The U.S.
has tried to reassure developing countries that including sanction-backed
labour provisions in the WTO was only a long-term policy goal.
- It is possible that a way ahead post-Seattle
could lie with the EU’s proposal for a joint International Labour
Organization (ILO)/WTO Standing Forum on Trade, Globalization and Labour to
examine a broad range of issues related to trade and labour. The major gulf
to overcome is the developing nation’s fears that entrenched labour rights
in the WTO will be another protectionist weapon developed nations can
utilize against them.
- Canada’s position has been to strengthen the
linkage between the ILO and the WTO, and to urge global compliance with the
ILO’s instruments on child labour and worker rights.
- There is no mention of labour and human rights
in the draft ministerial text. Future developments on this issue are
uncertain.
Environment And Trade
- At issue is whether environmental provisions
in trade agreements should be strengthened. There also needs to be work on
the relationship between WTO agreements and multilateral environmental
agreements (MEAs), some of which contain trade-related disciplines. (The
Basel Convention on toxic substances is an example of an MEA.)
- While the U.S. and the EU have proposed
linking trade and the environment, this position has been strongly rejected
by developing countries who view this potential linkage as protectionist.
The EU supports the use of the precautionary principle for environmental
protection.
- Canada’s position is to ensure that all
negotiating groups take environmental considerations fully into account such
that there is consistency between trade and environmental policies. This
extends to clarifying the relationship between WTO rules and trade measures
in MEAs. Canada supports the continued work of the WTO Committee on Trade
and the Environment (CTE).
- Despite the huge presence of NGOs and
protesters from environmental movements, the environment received scant
attention in Seattle. The draft ministerial text supported the continuation
of the CTE and included "sustainable development" amongst its
objectives. Many in the WTO view the tackling of environmental issues as
important if the organization is to overcome its bad public image.
Biotechnology
- With the rapid development of biotechnology
products, and the heated disputes over market access for hormone-treated
beef and genetically modified (GM) products, the issue at the WTO is whether
biotechnology discoveries and products should be covered under trade
agreements, or elsewhere.
- Canada proposed a working group on
biotechnology to examine existing agreements to determine if they adequately
protect trade in biotechnology products. The U.S. proposed a group simply to
examine and advance procedures for approval of biotechnology products by
member countries. The EU, some Asian and Latin American countries are
opposed to a working group on biotechnology, saying biotechnology should
come under the Biosafety Protocol (part of the Convention on Biological
Diversity) and that handling it at the WTO would undermine efforts to
negotiate this protocol.
- Canada seeks to maintain leadership in the
marketing of biotechnology products. It supports voluntary labelling of
genetically modified products.
Culture
- The debate on the Multilateral Agreement on
Investment (MAI) in 1998 and the split-run magazines case under the North
American Free Trade Agreement (NAFTA) in early 1999 dramatically raised the
profile of protection of culture under trade and investment agreements.
- The U.S. sees culture like any other business
and wants trade agreements to provide access to the cultural markets of
others. Canada, France and Belgium have been the main opponents of this
view, though the EU’s approach in Seattle was much less ambitious, urging
only protection for audiovisual services.
- Canada seeks recognition in the WTO of the
importance of preserving and promoting cultural diversity and proposed
specific language in the ministerial statement for a "new international
instrument" on culture, outside the WTO.
- There is little evidence that
"culture" was a focus at any of the negotiating tables in Seattle.
Canada did manage to insert four words into the preamble of the draft
ministerial statement. This reference, while modest, at least raises the
"culture" issue. It is unknown what will become of the proposal
for a "new international instrument".
Electronic Commerce
- Three key areas were discussed:
- Extension of the moratorium on new taxes on
e-commerce transactions - the two year extension being promoted by the U.S.
looks likely, however the EU has tied it to the classification issue (see
item 3 below). Canada supports the extension.
- That existing market access for services be
maintained for e-commerce services - the EU is proposing that there be no
"backsliding" in commitments already made to liberalize trade in
services simply because a service is now being offered via the Internet. The
existing coverage should apply regardless of the mode of provision of the
service.
- Classification of e-commerce transmissions -
the EU is proposing that all electronic transmissions be classified as a
service, which would make e-commerce subject to less stringent trade rules
and allow an exclusion for audiovisual services for cultural reasons. The
U.S. put off making a decision.
- While Canada supports an extension of the
moratorium, it believes other issues need to be negotiated together rather
than as individual components. Developed nations, including Canada, support
recognition of the need to promote developing countries’ access to and use
of infrastructure needed to support electronic commerce.
- Work will continue on e-commerce. A decision
on the moratorium on duties for transactions could be made by the WTO
General Council.
WTO Transparency
- Well before the Seattle meeting, there were
calls for more transparency in the WTO, both internal and external.
Internally, developing countries were very upset, and vocal, about the
"Green Room" model used before and at Seattle (small groups of
"key" countries - usually excluding developing ones - negotiate
text wording behind closed doors). African, Caribbean and Latin American
countries joined together to denounce their exclusion from key debates.
Externally, civil society groups charge the WTO with only allowing
participation of groups that stand to benefit economically from
liberalization and ignoring other societal interests.
- Most developed countries have made statements
that for the next round of negotiations to work, developing countries must
be consulted and integrated. Yet the discontent of developing countries on
transparency contributed powerfully to the failure of the Seattle talks. On
the inclusion of civil society, there is more division, with the EU, U.S.
and Canada leading for limited inclusion of civil society groups, while
Japan is less enthusiastic and many developing countries, especially Mexico,
are emphatically opposed.
- Canada’s stated position is that citizens’
groups have a role in trade and must be fully informed and consulted. The
WTO must be opened to improve access by non-governmental groups and must
release its documents more broadly and rapidly. The official Canadian
delegation included provincial and NGO representatives.
- The Seattle meeting’s draft ministerial text
(Dec. 3) contains paragraphs (#13 and #21) on increasing both external and
internal WTO transparency. The Director General is requested to consult with
countries and present his recommendations by July 2000. Though this text was
not agreed by ministers, post mortems on Seattle all recognize the
seriousness of the transparency crisis and that the success of further
negotiations depend in part on changes to WTO rules to better include
developing countries and other interests.
Developing countries
- Now the majority in the WTO, developing
countries are seeking significant movement on their issues in any new round
of trade negotiations. Many feel they have not received the benefits
promised by the existing Uruguay Round agreements and want to review
progress on these before negotiating on any new issues. For many, the
problem is lack of trained human resources and technical ability to deal
simultaneously with many agreements. They require technical assistance and
budget support to cope more effectively.
- Specifically, developing countries want
increased and earlier access to northern markets for their agricultural
products and textiles. They want an extension of implementation periods in
several agreements, like the Agreement on Trade Related Investments Measures
(TRIMS) and the Agreement on Trade Related Aspects of Intellectual Property
Rights (TRIPS). They want a review of WTO rules on anti-dumping, used by
developed countries to keep out their exports. Many want to assure access to
lower cost pharmaceuticals.
- There is broad recognition amongst developed
countries that more needs to be done to integrate developing countries.
Several made specific commitments before and in Seattle, e.g. EU and Japan
will grant most LDC exports duty-free access by the end of the Seattle
round. Several EU countries committed funds for technical assistance. Japan
and Korea support developing countries on a review of anti-dumping. The U.S.
is opposed to changing the rules on anti-dumping and to extension of the
TRIPS deadline for protecting plant varieties under patents or other
systems.
- Canada is a strong supporter of the
integration of developing countries into the international trading system.
It has committed significant resources to technical assistance and proposed
that this function be integrated within the WTO regular budget. Canada
supports differential treatment in the trade agreements and a review of
anti-dumping rules.
- The Seattle draft declaration of December 3
contained many references that attempted to help developing countries to
enter a more liberalized trading regime. Most specifically, texts on
technical cooperation and on Action in Favour of Least-Developed Countries (LDCs),
for immediate decision, were worked out. They would provide increased
technical assistance for capacity building, longer transition periods,
accelerated accession for LDCs to the WTO and a new Committee on LDCs. In
addition, much of a long annex on implementation, addressing everything from
anti-dumping to special and differential treatment, contains measures
designed to accommodate developing countries. Still, Inside U.S. Trade
reports that the Dec. 3 draft ministerial text "reflects few of the
priorities that had been sought by developing countries", specifically
in the area of access for textiles and for protection of their intellectual
property.
- All these texts remain suspended along with
talks on new negotiations.
source: WTO, Last Updated February 22, 2001
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